Financial Markets Theory pp 71-110 | Cite as

# General Equilibrium Theory and Risk Exchange

Chapter

## Abstract

An economy is in equilibrium when it produces messages which do not induce the agents to modify the theories they believe in or the policies which they pursue. Hahn (1973)

### Keywords

Income Assure Dition Librium Rium## Preview

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### Notes

- 1.Some elements of the economy are common knowledge among the agents if each agent knows them, knows that the others know them, knows that the others know that he knows and so on. Agents cannot agree to disagree. For a more precise definition of common knowledge see [700].Google Scholar
- 2.A separating hyperplane Theorem useful to our goals is provided in [561]. Given two closed convex cones
*M*and*H*in ℜ^{n}such that*H*∩*M*= 0, if*H*contains as linear subspace only 0 then there exists a nonzero linear functional*F*(-) such that*F*(*x*) <*F*(*y*) ∀*xM*and ∀*y*∈*H*with*y*≠ 0.Google Scholar

## Copyright information

© Springer-Verlag London 2003