Decisions and optimality in competitive stock ownership economies.
Reexamination of the decision theoretic structure of a Diamond-Dreze stock market economy reveals that general lack of optimal equilibrium allocations is an informational problem. Prices of firms' shares and observed production convey information sufficient for weak form market efficiency, but is i...
| Publicado en: | International Economic Review Vol. 36; pp. 53 - 75 |
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| Formato: | Artículo |
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Wiley-Blackwell
February 1995
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| Acceso en línea: | Ver este registro en EBSCOhost |
| Sumario: | Reexamination of the decision theoretic structure of a Diamond-Dreze stock market economy reveals that general lack of optimal equilibrium allocations is an informational problem. Prices of firms' shares and observed production convey information sufficient for weak form market efficiency, but is inadequate for investors to select socially optimal portfolios which constitute strong form market efficiency. Revising the optimality concept to accommodate information constraints yields a notion of information constrained Pareto optimality. This concept reflects general application of the principle of semistrong form market efficiency. Our approach subsumes the Bayesian approach. Reprinted by permission of the publisher. |
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