Comparing Sunspot Equilibrium and Lottery Equilibrium Allocations: The Finite Case

36 Pages Posted: 26 May 2004

See all articles by Rod Garratt

Rod Garratt

University of California, Santa Barbara (UCSB) - Department of Economics

Todd Keister

Rutgers, The State University of New Jersey - Department of Economics

Karl Shell

Cornell University - Department of Economics

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.

Suggested Citation

Garratt, Rod and Keister, Todd and Shell, Karl, Comparing Sunspot Equilibrium and Lottery Equilibrium Allocations: The Finite Case. International Economic Review, Vol. 45, No. 2, pp. 351-386, May 2004. Available at SSRN: https://ssrn.com/abstract=531315

Rod Garratt (Contact Author)

University of California, Santa Barbara (UCSB) - Department of Economics ( email )

2127 North Hall
Santa Barbara, CA 93106
United States

Todd Keister

Rutgers, The State University of New Jersey - Department of Economics ( email )

75 Hamilton Street
New Brunswick, NJ 08901
United States

HOME PAGE: http://econweb.rutgers.edu/tkeister

Karl Shell

Cornell University - Department of Economics ( email )

414 Uris Hall
Ithaca, NY 14853-7601
United States
607-255-5277 (Phone)
607-255-8838 (Fax)

HOME PAGE: http://www.karlshell.com

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