Differential Information Economies and Incomplete Markets

Download or read book Differential Information Economies and Incomplete Markets written by Kira Pronin and published by . This book was released on 2019 with total page 57 pages. Available in PDF, EPUB and Kindle. Book excerpt: In a pure exchange economy with differential information, there may be ex-post Pareto-dominant core allocations which are not attainable as rational expectations equilibria because of information verifiability issues. On the other hand, many of the core allocations in the differential information economy do not seem realistic, given incentive constraints. This fundamental tension between missed trading opportunities and moral hazard will be explored using concepts from cooperative game theory and financial economics.