We investigate the fairness property of equal-division competitive market equilibria (CME) in asymmetric information economies with a space of agents that may contain non-negligible (large) traders. We rst propose an extension to our framework of the notion of strict fairness due to Zhou (1992).We prove that once agents are asymmetrically informed, any equal-division CME allocation is strictly fair, but a strictly fair allocation might not be supported by an equilibrium price. Then, we investigate the role of large traders and we provide two sucient conditions under which, in the case of complete information economies, a redistribution of resources is strictly fair if and only if it results from a competitive mechanism.
Strict fairness of equilibria in asymmetric information economies and mixed markets / Donnini, Chiara; Pesce, Marialaura. - In: ECONOMIC THEORY. - ISSN 0938-2259. - 69:(2020), pp. 107-124. [10.1007/s00199-018-1158-0]
Strict fairness of equilibria in asymmetric information economies and mixed markets
Donnini, Chiara;Pesce, Marialaura
2020
Abstract
We investigate the fairness property of equal-division competitive market equilibria (CME) in asymmetric information economies with a space of agents that may contain non-negligible (large) traders. We rst propose an extension to our framework of the notion of strict fairness due to Zhou (1992).We prove that once agents are asymmetrically informed, any equal-division CME allocation is strictly fair, but a strictly fair allocation might not be supported by an equilibrium price. Then, we investigate the role of large traders and we provide two sucient conditions under which, in the case of complete information economies, a redistribution of resources is strictly fair if and only if it results from a competitive mechanism.I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.
