Comparing sunspot equilibrium and lottery equilibrium allocations: The finite case

Rod Garratt, Todd Keister, Karl Shell

Research output: Contribution to journalReview articlepeer-review

5 Scopus citations

Abstract

Sunspot equilibrium and lottery equilibrium are two stochastic solution concepts for nonstochastic economies. We compare these concepts in a class of completely finite, (possibly) nonconvex exchange economies with perfect markets, which requires extending the lottery model to the finite case. Every equilibrium allocation of our lottery model is also a sunspot equilibrium allocation. The converse is almost always true. There are exceptions, however: For some economies, there exist sunspot equilibrium allocations with no lottery equilibrium counterpart.

Original languageEnglish (US)
Pages (from-to)351-386
Number of pages36
JournalInternational Economic Review
Volume45
Issue number2
DOIs
StatePublished - May 2004
Externally publishedYes

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

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