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Browsing by Author "Prescott, Edward C."

Now showing 1 - 3 of 3
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    General Competitive Analysis in an Economy with Private Information
    (Center for Economic Research, Department of Economics, University of Minnesota, 1981-04) Townsend, Robert M.; Prescott, Edward C.
    General competitive analysis is extended to cover a dynamic, pure-exchange economy with privately observed shocks to preferences. In the linear, infinite-dimensional space containing lotteries we establish the existence of optima, the existence of competitive equilibria, that every competitive equilibrium is an optimum, and, with some revealing qualifications, that every optimum can be supported as a competitive equilibrium. An example illustrates that rationing and securities with contrived risk have an equilibrium interpretation.
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    Invariant Distributions for Monotone Markov Processes
    (Center for Economic Research, Department of Economics, University of Minnesota, 1987-09) Hopenhayn, Hugo A.; Prescott, Edward C.
    The existence of fixed points for monotone maps on spaces of measures is established. The case of monotone Markov processes is analyzed and a uniqueness and global stability condition is developed. A comparative statics result is presented and the problem of approximation to the invariant distribution is discussed. The conditions of the theorems are verified for the cases of Optimal Stochastic Growth and Industry Equilibrium.
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    Optima and Competitive Equilibria with Adverse Selection and Moral Hazard
    (Center for Economic Research, Department of Economics, University of Minnesota, 1981-06) Prescott, Edward C.; Townsend, Robert M.
    This paper explores the extent to which standard, general equilibrium analysis of optima and competitive equilibria in the linear space containing lotteries can be applied to environments with moral· hazard and adverse selection problems. Techniques for characterizing optima as solutions to linear programs are found to be useful and nice and appear to be broadly applicable. But existence and optimality of competitive equilibria seem to require that agents with characteristics which are distinct and privately observed at the time -of initial trading enter the economy-wide resource constraints in a homogeneous way; subsequent heterogeneity is not critical. The homogeneity condition is satisfied for a dynamic private-information securities economy and a moral hazard insurance economy, but not for the well-known and interesting signaling and adverse-selection insurance economies. For the latter, heterogeneity introduces an externality of some kind.