Risk aversion and uniqueness of equilibrium in economies with two goods and arbitrary endowments

DOI10.1515/BEJTE-2021-0150MaRDI QIDQ6136265zbMATH OpenOpenAlexFDO

Authors Andrea Loi, Stefano Matta

Publication date 29 August 2023

Published in The B.E. Journal of Theoretical Economics (Search for Journal in Brave)

Full work available at URL https://arxiv.org/abs/2107.01947

zbMATH Keywords

risk aversionpolynomial approximationuniqueness of equilibriumDescartes' rule of signsexcess demand functionNewton's symmetric polynomials

Mathematics Subject Classification ID

Utility theory (91B16)

Abstract: We study the connection between risk aversion, number of consumers and uniqueness of equilibrium. We consider an economy with two goods and $c$ impatience types, where each type has additive separable preferences with HARA Bernoulli utility function, $u_H(x):=fracgamma1-gammaleft(b+fracagammaxight{)}^{1-gamma}$. We show that if $gammainleft(1,fraccc-1ight]$, the equilibrium is unique. Moreover, the methods used, involving Newton's symmetric polynomials and Descartes' rule of signs, enable us to offer new sufficient conditions for uniqueness in a closed-form expression highlighting the role played by endowments, patience and specific HARA parameters. Finally, new necessary and sufficient conditions in ensuring uniqueness are derived for the particular case of CRRA Bernoulli utility functions with $gamma=3$.

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Cites work

• scientific article; zbMATH DE number 3843854 (Why is no real title available?)
• scientific article; zbMATH DE number 19474 (Why is no real title available?)
• Curvature and uniqueness of equilibrium
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• Gross substitution in financial markets
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Cited in

(4)

• Endowments, patience types, and uniqueness in two-good HARA utility economies
• Recent advances on uniqueness of competitive equilibrium
• A new approach to the uniqueness of equilibrium with CRRA preferences
• On the functional equivalence of two perfectly competitive economies with negative exponential utility and linear utility with a quadratic holding cost

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