Fratini, Saverio M. and Levrero, Enrico Sergio (2009): A remark on the supposed equivalence between complete markets and perfect foresight hypothesis.
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We consider a sequential equilibrium model over two periods, during the first of which agents have perfect information and their expectations are formed as if there were complete future markets. We show that, in the second period, equilibrium prices may well be different from those expected, without any unexpected change having occurred. This result highlights a lack of correspondence between the perfect foresight hypothesis and that of complete markets.
|Item Type:||MPRA Paper|
|Original Title:||A remark on the supposed equivalence between complete markets and perfect foresight hypothesis|
|Keywords:||Arrow-Debreu equilibrium, Complete markets, Sequential equilibrium, Perfect foresight, Indeterminacy|
|Subjects:||D - Microeconomics > D4 - Market Structure and Pricing > D46 - Value Theory
D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D84 - Expectations; Speculations
D - Microeconomics > D5 - General Equilibrium and Disequilibrium > D51 - Exchange and Production Economies
|Depositing User:||Saverio M. Fratini|
|Date Deposited:||01. Jul 2009 09:13|
|Last Modified:||15. Feb 2013 20:34|
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