Title

Information and the Existence of Stationary Markovian Equilibrium

Document Type

Discussion Paper

Publication Date

6-1-2000

CFDP Number

1261

CFDP Pages

17

Abstract

We describe conditions for the existence of a stationary Markovian equilibrium when total production or total endowment is a random variable. Apart from regularity assumptions, there are two crucial conditions: (i) low information — agents are ignorant of both total endowment and their own endowments when they make decisions in a given period, and (ii) proportional endowments — the endowment of each agent is in proportion, possibly a random proportion, to the total endowment. When these conditions hold, there is a stationary equilibrium. When they do not hold, such equilibrium need not exist.

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