A remark on the supposed equivalence between complete markets and perfect foresight hypothesis

We consider a sequential equilibrium model over two periods, during the first of which agents have perfect information and their expectations are formed as if there were complete future markets. We show that, in the second period, equilibrium prices may well be different from those expected, without any unexpected change having occurred. This result highlights a lack of correspondence between the perfect foresight hypothesis and that of complete markets.

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Year of publication:	2009-06
Authors:	Fratini, Saverio M. ; Levrero, Enrico Sergio

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Type of publication:	Book / Working Paper
Language:	English
Notes:	Fratini, Saverio M. and Levrero, Enrico Sergio (2009): A remark on the supposed equivalence between complete markets and perfect foresight hypothesis.
Classification:	D46 - Value Theory ; D84 - Expectations; Speculations ; D51 - Exchange and Production Economies
Source:	BASE

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