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On the completeness of complete markets

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Herings, Jean-Jacques [Universiteit Maastricht] Rohde, Kirsten I.M. []

We reconsider the allocational invariance of equilibria to different formulations of market completeness. We identify the so-far neglected assumption of sophisticated behavior as being crucial. First, the Arrow-Debreu setting is considered, where markets do not reopen in the future. Second, sequentially complete markets are analyzed, where goods on the spot markets and all contingent one-period ahead commodities can be traded in every state. Finally, complete markets are analyzed, where all possible contingent commodities can be traded at every state. Preferences may be time-consistent or time-inconsistent. A distinction is made between naïve and sophisticated behavior.

Document type Article de périodique (Journal article)
Access type Accès interdit
Publication date 2008
Language Anglais
Journal information "Economic Theory" - Vol. 37, no. 2, p. 171-201 (Novembre 2008)
Peer reviewed yes
Publisher Springer (Berlin)
issn 0938-2259
e-issn 1432-0479
Publication status Publié
Affiliations Universiteit Maastricht - Department of Economics
Erasmus Universiteit Rotterdam - Department of Economics
UCL - EUEN/CORE - Center for operations research and econometrics
Keywords Time inconsistency ; Competitive equilibrium ; Market completeness ; Allocation equivalence
Links
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Bibliographic reference Herings, Jean-Jacques ; Rohde, Kirsten I.M.. On the completeness of complete markets. In: Economic Theory, Vol. 37, no. 2, p. 171-201 (Novembre 2008)
Permanent URL http://hdl.handle.net/2078.1/28525