Proper preferences and quasi-concave utility functions (Q1089237): Difference between revisions

\textit{A. MasColell} [Econometrica 54, 1039-1053 (1986; Zbl 0602.90028)] showed that in economies with an infinite-dimensional commodity space represented by a vector lattice, the usual assumptions on preferences do not ensure the existence of an equilibrium, because the positive cone (representing the consumption set) needs not be closed. An additional assumption on preferences was introduced called properness which, loosely speaking, requires that at each consumption bundle there exists a negative dispreferred direction. Uniform properness then requires that this direction is the same for each consumption bundle. In the present paper the authors first show that under the assumptions of MasColell the utility function defined on the positive cone can be extended on a larger set with non empty interior, and that it has suitable continuity properties. This result facilitates the existence proof. Further, an example of non existence of an equilibrium is presented in an economy where the properness assumption is satisfied but where it is not uniform. The latter assumption appears to be necessary to ensure that a price can be found that supports the aggregate rather than the individual preferred sets.