We show that financial innovations that change the collateral capacity of assets in the economy can affect investment even in the absence of any shift in utilities, productivity, or asset payoffs. First we show that the ability to leverage an asset by selling non-contingent promises can generate over-investment compared to the Arrow-Debreu level. Second, we show that the introduction of naked C...

We study the suitability of using absolute risk aversion as a measure of willingness to take risk in the Arrow-Debreu portfolio framework. A global measure of risk for Arrow-Debreu portfolios is introduced. This measure is termed ‘conservatism’. We show that the concept of ‘more conservative’ is stronger than that of ‘more risk-averse’. A higher absolute risk aversion is only necessary but not ...

We study the linear Arrow-Debreu’s model and derive a fix point method to find the market equilibrium. The convergence of this method is proved, while the speed is unknown. Besides that, properties about utility distribution and the partition of buyers are also studied. I. PROBLEM DEFINITION The problems of market equilibrium were initially studied in the domain of mathematical economics. We st...

In this paper, we establish a connection between ranking theory and general equilibrium theory. First of all, we show that the ranking vector of PageRank or Invariant method is precisely the equilibrium of a special Cobb-Douglas market. This gives a natural economic interpretation for the PageRank or Invariant method. Furthermore, we propose a new ranking method, the CES ranking, which is minim...

The classical tools of general equilibrium theory are convexity and general topology. One of Debreu’s lasting contributions has been to show how the tools of differential topology may serve to yield more refined information about equilibrium. In particular, Debreu (1970) showed that differential topology could provide a rigorous formalization of “counting equations and unknowns” to provide a sa...

We introduce a new family of utility functions for exchange markets. This family provides a natural and ”continuous” hybridization of the traditional linear and Leontief utilities and might be useful in understanding the complexity of computing and approximating of market equilibria. We show that a Fisher equilibrium of an exchange market with m commodities and n traders and hybrid linear-Leont...

The objective of general equilibrium theory is to understand how the complex structure of contractual markets, characteristic of a modern economy, provides a mechanism for agents (consumers, firms and government) to coordinate their decisions, share their risks and create appropriate incentives, in an evolving intertemporal setting with uncertainty. The basic skeleton on which the theory is con...