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T-Space at The University of Toronto Libraries >
Theoretical Economics >
Volume 2, Number 2 (June 2007) >

Please use this identifier to cite or link to this item: http://hdl.handle.net/1807/9744

Title: Incomplete markets with no Hart points
Authors: Robert M. Anderson; University of California, Berkeley
Roberto C. Raimondo; University of Melbourne
Keywords: Incomplete Markets, GEI model, Hart points
D52
Issue Date: 3-Jun-2007
Publisher: Theoretical Economics
Citation: Theoretical Economics; Vol 2, No 2 (2007)
Abstract: [This item is a preserved copy. To view the original, visit http://econtheory.org/] We provide a geometric test of whether a general equilibrium incomplete markets (GEI) economy has Hart points---points at which the rank of the securities payoff matrix drops. Condition (H) says that, at each nonterminal node, there is an affine set (of appropriate dimension) that intersects all of a well-specified set of convex polyhedra. If the economy has Hart points, then Condition (H) is satisfied; consequently, if condition (H) fails, the economy has no Hart points. The shapes of the convex polyhedra are determined by the number of physical goods and the dividends of the securities, but are independent of the endowments and preferences of the agents. Condition (H) fails, and thus there are no Hart points, in interesting classes of economies with only short-lived securities, including economies obtained by discretizing an economy with a continuum of states and sufficiently diverse payoffs.
URI: http://hdl.handle.net/1807/9744
Other Identifiers: http://econtheory.org/ojs/index.php/te/article/view/20070115
Rights: Authors who publish in <i>Theoretical Economics</i> will release their articles under the <a href="http://creativecommons.org/licenses/by-nc/2.5/">Creative Commons Attribution-NonCommercial license</a>. This license allows anyone to copy and distribute the article for non-commercial purposes provided that appropriate attribution is given.
Appears in Collections:Volume 2, Number 2 (June 2007)

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