Interim efficiency with MEU-preferences

• Published in: Journal of economic theory Vol. 145; no. 5; pp. 1987 - 2017
• Main Author: Martins da Rocha, Victor Filipe
• Format: Journal Article
• Language: English
• Published: New York Elsevier Inc 01.09.2010; Elsevier; Elsevier Science Publishing Company, Inc
• Series: Journal of Economic Theory
• Subjects: Allocations; Ambiguity; Asymmetry; Common knowledge; Documents; Economic efficiency; Economic models; Economic theory; Economics; Economics and Finance; Exchange theory; Expected utility; Humanities and Social Sciences; Interim efficiency; Interim efficiency Multiple priors and posteriors MaxMin expected utility No-trade Common knowledge; Mathematical economics; MaxMin expected utility; Microeconomics; Multiple priors and posteriors; No-trade; Preferences; Proving; Studies; Uncertainty; Utilities; Utility functions; D84; Multiple priors and posteriors; No-trade; Common knowledge; D81; MaxMin expected utility; D82; Interim efficiency
• ISSN: 0022-0531; 1095-7235
• DOI: 10.1016/j.jet.2010.03.002

Recently Kajii and Ui (2009) [17] proposed to characterize interim efficient allocations in an exchange economy under asymmetric information when uncertainty is represented by multiple posteriors. When agents have Bewley's incomplete preferences, Kajii and Ui (2009) [17] proposed a necessary and sufficient condition on the set of posteriors. However, when agents have Gilboa–Schmeidler's MaxMin expected utility preferences, they only propose a sufficient condition. The objective of this paper is to complete Kajii and Ui's work by proposing a necessary and sufficient condition for interim efficiency for various models of ambiguity aversion and in particular MaxMin expected utility. Our proof is based on a direct application of some results proposed by Rigotti, Shannon and Stralecki (2008) [24].