Authors:

  • Tomasz Strzalecki

Excerpt

Coarse Competitive Equilibrium and Extreme Prices. Tomasz Strzalecki, July 10, 2015, Paper. "We introduce a notion of coarse competitive equilibrium (CCE), to study households' inability to tailor their consumption to the state of the economy. Our notion is motivated by limited cognitive ability (in particular attention, memory, and complexity) and it maintains the complete market structure of competitive equilibrium. Compared to standard competitive equilibrium, our concept yields riskier allocations and more extreme prices (both for consumption and for assets)..." Link