Comparing Sunspot Equilibrium and Lottery Equilibrium Allocations: the Finite Case∗ by Rod Garratt,
نویسندگان
چکیده
Sunspot equilibrium and lottery equilibrium are two stochastic solution concepts for nonstochastic economies. We compare these concepts in a class of completely finite, (possibly) nonconvex exchange economies with perfect markets, which requires extending the lottery model to the finite case. Every equilibrium allocation of our lottery model is also a sunspot equilibrium allocation. The converse is almost always true. There are exceptions, however: For some economies, there exist sunspot equilibrium allocations with no lottery equilibrium counterpart.
منابع مشابه
Comparing Sunspot Equilibrium and Lottery Equilibrium Allocations: the Finite Case by Rod Garratt, Todd Keister, and Karl Shell
Sunspot equilibrium and lottery equilibrium are two stochastic solution concepts for nonstochastic economies. Recent work by Garratt, Keister, Qin, and Shell (in press) and Kehoe, Levine, and Prescott (in press) on nonconvex exchange economies has shown that when the randomizing device is continuous, applying the two concepts to the same fundamental economy yields the same set of equilibrium al...
متن کاملComparing Sunspot Equilibrium and Lottery Equilibrium Allocations: The Finite Case
Sunspot equilibrium and lottery equilibrium are two stochastic solution concepts for nonstochastic economies. Recent work on nonconvex exchange economies has shown that when the randomizing device is a continuous random variable, applying the two concepts to the same fundamental economy yields the same set of equilibrium allocations. In the present paper, we examine economies based on a discret...
متن کاملA Characterization of Robust Sunspot Equilibria
In nonconvex environments, a sunspot equilibrium can sometimes be destroyed by the introduction of new extrinsic information. We provide a simple test for determining whether or not a particular equilibrium survives, or is robust to, all possible re...nements of the state space. We use this test to provide a characterization of the set of robust sunspot-equilibrium allocations of a given econom...
متن کاملEquilibrium Prices When the Sunspot Variable Is Continuous
We analyze sunspot-equilibrium prices in nonconvex economies with perfect markets and a continuous sunspot variable. Our primary result is that every sunspot equilibrium allocation can be supported by prices that, when adjusted for probabilities, are constant across states. This result extends to the case of a finite number of equally probable states under weak nonsatiation conditions, but does...
متن کاملDecentralizing lottery allocations in markets with indivisible commodities
In economies with indivisible commodities, consumers tend to prefer lotteries in commodities. A potential mechanism for satisying these preferences is unrestricted purchasing and selling of lotteries in decentralized markets, as suggested in Prescott and Townsend [-Int. Econ. Rev. 25, 1-20]. However, this paper shows in several examples that such lottery equilibria do not always exist for econo...
متن کامل