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Equilibrium in Incomplete Markets

  • Overlapping Expectations and Hart's Conditions for Equilibrium in a Securities Model,” Journal of Economic Theory 31 (1983), 170-175; reprinted in J.-M. Grandmont (ed.), Temporary Equilibrium: Selected Readings (New York: Academic Press, 1988), pp. 156–161.


    Hart (J. Econ. Theory 9 (1974), 293–311) gave conditions for equilibrium to exist in a securities model where each agent undertakes asset transactions to maximize expected utility of wealth. These conditions rule out agents wanting to undertake unbounded balanced transactions to reach a Pareto superior allocation given their expectations. With mild extra assumptions to make agents unwilling to risk incurring unbounded losses on their portfolios, Hart’s conditions become equivalent to an assumption of “overlapping expectations,” which is comparable to a much weaker form of Green’s “common expectations” (Econometrica 41 (1973), 1103–1124). ScienceDirect link

  • General Asset Markets, Private Capital Formation, and the Existence of Temporary Walrasian Equilibrium,” Stanford University, Institute of Mathematical Studies in the Social Sciences, Economics Technical Report No. 394 (1982).
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  • On the Irrelevance of Share Contracts,” (1977) revised as “On the Irrelevance of Stock Markets under Constant Returns to Scale and Free Access,” (1979).