This paper defines and studies optimality in a dynamic stochastic economy with finitely lived agents, and investigates the optimality properties of an equilibrium with or without sequentially complete markets. Various Pareto optimality concepts are considered, including interim and ex ante optimality. We show that, at an equilibrium with a productive asset (land) and sequentially complete marke...

For a general class of pure exchange OLG economies under uncertainty, we provide a complete characterization of the efficiency properties of competitive equilibria when markets are only sequentially complete and the criterion of efficiency is conditional Pareto optimality. We also consider a particular case in which markets fail to be even sequentially complete and provide a characterization wh...

This paper studies the efficiency of competitive equilibria in environments with a moral hazard problem and unobserved states, both with retrading in ex post spot markets. The interaction between private information problems and the possibility of retrade creates an externality, unless preferences have special, restrictive properties. The externality is internalized by allowing agents to contra...

There is a long normative ‘Social Contract’ tradition that attempts to characterize ex-post income inequalities that are agreeable to all ‘behind a veil of ignorance.’ This paper takes a similar normative approach to characterize social decision-making procedures. It is shown that quite generally some form of majority-voting is preferred to unanimity ‘behind a veil of ignorance’ whenever societ...

The paper extends Diamond’s (1984) analysis of financial contracting with information asymmetry ex post and endogenous ”bankruptcy penalties” to allow for risk aversion of the borrower. The optimality of debt contracts, which Diamond obtained for the case of risk neutrality, is shown to be nonrobust to the introduction of risk aversion. This contrasts with the costly state verification literatu...

This paper demonstrates the optimality of a non-maximal penalty in a hierarchical enforcement structure. The penalty is chosen by the social planner to maximize the probability of monitoring and to minimize the probability of transgression. We compare the optimal penalty levels with and without ex post flexibility wherein the players are allowed to alter their decision after they observe the so...

the realization optimality theory is a recent development in the original optimality theory which is proposed to deal with morphological issues especially the inflectional ones. its main idea is to consider the morphological realization rules as ranked violable language-specific constraints that control the realization processes and provide phonological information of grammatical morphemes. thi...

Pattanaik and Peleg (1986) imposed regularity, ex-post Pareto optimality and independence of irrelevant alternatives on a probabilistic voting procedure and showed that: (i) the distribution of coalitional power for decisiveness in two-alternative feasible sets is subadditive in general, but additive if the universal set has at least four alternatives; and (ii) the distribution of coalitional p...

this paper provides an optimality-theoretic account of dissimilation in standard persian as well as some other accents and dialects of persian. as such, this work starts by introducing optimality theory (henceforth ot) and its basic concepts and then it investigates dissimilation in this framework. it argues for the superiority of ot over derivational approaches regarding a case in which both d...

We address robust mechanism design for bilateral trade of an indivisible commodity, under incomplete information on traders’ private reservation values. Under ex-post individual rationality and ex-post incentive compatibility, we define the notion of ex-post constrained-efficiency. It is weaker than interim constrained efficiency, and it is a notion of constrained optimality that is independent...