Information inefficiency in a random linear economy model
General Finance
2016-10-11 v2 Physics and Society
Abstract
We study the effects of introducing information inefficiency in a model for a random linear economy with a representative consumer. This is done by considering statistical, instead of classical, economic general equilibria. Employing two different approaches we show that inefficiency increases the consumption set of a consumer but decreases her expected utility. In this scenario economic activity grows while welfare shrinks, that is the opposite of the behavior obtained by considering a rational consumer.
Keywords
Cite
@article{arxiv.1610.01270,
title = {Information inefficiency in a random linear economy model},
author = {Joao Pedro Jerico and Renato Vicente},
journal= {arXiv preprint arXiv:1610.01270},
year = {2016}
}
Comments
5 pages, 5 figures