Equilibrium prices when the sunspot variable is continuous.
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Sunspot equilibrium prices are studied in nonconvex economies with perfect markets and a continuous sunspot variable. The main result is that every sunspot equilibrium allocation can be supported by prices that, when adjusted for probabilities, are constant across states. The result extends to the case of a finite number of equally probable states under a nonsatiation condition, but does not extend to general discrete state spaces.
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Cites work
- Convexity and sunspots: Another remark
- Decentralizing lottery allocations in markets with indivisible commodities
- Exchange Rate Volatility in an Equilibrium Asset Pricing Model
- Extrinsic uncertainty revisited
- General Competitive Analysis in an Economy with Private Information
- Indivisibilities, lotteries, and sunspot equilibria
- Lotteries, sunspots, and incentive constraints
- Market Uncertainty: Correlated and Sunspot Equilibria in Imperfectly Competitive Economies
- Pareto Optima and Competitive Equilibria with Adverse Selection and Moral Hazard
- Robustness of sunspot equilibria
- Speculation and price fluctuations with private, extrinsic signals
- When sunspots don't matter
Cited in
(9)- Competitive equilibria with asymmetric information
- Introduction to sunspots and lotteries
- Lotteries, sunspots, and incentive constraints
- A characterization of robust sunspot equilibria
- Aggregation in economies with search frictions
- Non-stationary, stable Markov processes on a continuous state space
- Do taxspots matter? A study of optimal tax uncertainty
- Equivariant general equilibrium theory
- General equilibrium with nonconvexities and money
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