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The New Palgrave Dictionary of Economics pp 13983–14000Cite as

Palgrave Macmillan

Uncertainty and General Equilibrium

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Abstract

This article reviews alternative approaches to incorporating uncertainty in Walrasian models. It begins with a sketch of the Arrow–Debreu model of complete markets. An extension of this framework allowing for economic agents to have different information about the environment is followed by a critique. When markets are incomplete and trades take place sequentially, several types of equilibrium concept arise according to the hypotheses we make about the way traders form their expectations. We present conditions for the existence of equilibria for two such equilibrium concepts, and discuss the possible failure to attain Paretian welfare optima.

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Authors and Affiliations

  1. http://link.springer.com/referencework/10.1057/978-1-349-95121-5

    Mukul Majumdar & Roy Radner

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  1. Mukul Majumdar
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  2. Roy Radner
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Majumdar, M., Radner, R. (2018). Uncertainty and General Equilibrium. In: The New Palgrave Dictionary of Economics. Palgrave Macmillan, London. https://doi.org/10.1057/978-1-349-95189-5_1630

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