Introduction

Abstract

The fact that an important part of all economic activity takes place under conditions of uncertainty or imperfect information raises a number of interesting and difficult problems for economic theory, which have only comparatively recently become the subject of rigorous analysis (cf. Remarks & References in Sec. 0.3). For example, do price equilibria exist in a market where agents are uncertain about the prices at which they can buy goods? If so, how do these equilibria differ from the perfect information case? Or, if the future is uncertain and trading takes place sequentially in markets that are not complete in the Arrow-Debreu sense (i.e., there are no “state-contingent claims”), how does the allocation of goods—and hence the agents’ welfare—depend on the way in which the uncertainty about the future is resolved over time?