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Full-Text Articles in Social and Behavioral Sciences
A Stochastic Overlapping Generations Economy With Inheritance, Ioannis Karatzas, Martin Shubik, William D. Sudderth
A Stochastic Overlapping Generations Economy With Inheritance, Ioannis Karatzas, Martin Shubik, William D. Sudderth
Cowles Foundation Discussion Papers
An overlapping generations model of an exchange economy is considered, with individuals having a finite expected life-span. Conditions concerning birth, death, inheritance and bequests are fully specified. Under such conditions, the existence of stationary Markov equilibrium is established in some generality, and several explicitly solvable examples are treated in detail.
Information And The Existence Of Stationary Markovian Equilibrium, Ioannis Karatzas, Martin Shubik, William D. Sudderth
Information And The Existence Of Stationary Markovian Equilibrium, Ioannis Karatzas, Martin Shubik, William D. Sudderth
Cowles Foundation Discussion Papers
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.