This article presents a general equilibrium model in which middlemen emerge to facilitate trade in an environment of idiosyncratic tastes and heterogeneous goods. The gains to the traders can be measured along three dimensions: The rate of production, the time-preference losses generated by the...

The transitivity axiom is common to nearly all descriptive and normative utility theories of choice under risk. Recent experiments claim to show observed intransitive preference cycles are no more than noise. We take issue with this consensus position and its normative defence of transitivity....