Exchange Economies

Abstract

The model of an exchange economy with asymmetric information as developed in this chapter differs from the approaches discussed so far in two important respects: The modeling of information and the definition of feasible allocations. Information is considered as a constituent part of an economy and not just as a restriction on the possible consumption plans as usually done in the literature. This allows for taking into account both aspects of information simultaneously, as mentioned in the introduction: Information as a commodity and information as a characteristic of an agent. Modeling information in this way is analogous to the treatment of uncertainty in models of general equilibrium, as e.g. Debreu (1953). He suggested to define commodities not only with respect to physical properties, time and place but also with respect to the state of nature in which the commodities are available. The definition employed here extends this approach by differentiating commodities with respect to information.