The rational expectations equilibrium (REE), as introduced in Radner (1979) in a general equilibrium setting à la Arrow-Debreu-Mckenzie, often fails to have normative properties such as universal existence, incentive compatibility and efficiency. We resolve those problems by providing a new model which makes the standard REE a desirable solution concept. In particular, we consider an asymmetric...

We show that for a specific class of random matching Edgeworthian economies, the expectation of the limiting equilibrium price coincides with the equilibrium price of the related Walrasian economies. This result extends to the study of economies in the presence of uncertainty within the multi-period Arrow-Debreu model, allowing to understand the dynamics of how beliefs survive and propagate thr...

Restrictions that a class of general equilibrium models place upon the average returns of equity and Treasury bills are found to be strongly violated by the U.S. data in the 1889-1978 period. This result is robust to model specification and measurement problems. We conclude that, most likely, an equilibrium model which is not an Arrow-Debreu economy will be the one that Simultaneously rationali...