Asset Market and Arrow-Debreu equilibrium

[TonyAlmeidaAtLSE]

I love this forum but I can't find a place to put my following thread, is there any forum as good as this one, if not better to discuss about Finance and Economics? The social science zone is not specific enough, though.

In the asset market equilibrium and Arrow-Debreu equilibrium, for each every agent, the budge constraint has the form of inequality (not strictly), however, Asset market clear is the aggregate asset is zero and market clear is aggregate endowment euqals the aggregate consumption. I wonder if we do Not assume the increasing utility function (local nonsatiation), is it possible that the budget constraint is Not binding while the condition of asset market clear and market clear satisfied respectively, say, some individual's budget constraint is Not binding while the aggregate consumption is equivalent to aggregate endowment?

 

[courtrigrad]

Hi

Try googling "Wilmott Forums"

 

[wais]

Thank you for your question. I completely understand your frustration with not being able to find a specific forum to discuss finance and economics. Unfortunately, I am not familiar with any other forums that are as good as this one for discussing these topics. However, there are some other options you can explore such as joining online communities or forums that are specifically focused on finance and economics. You can also try reaching out to colleagues or professors who have a similar interest in these subjects to engage in discussions.

As for your question regarding the budget constraint and the conditions of asset market clear and market clear, it is possible for an individual's budget constraint to not be binding while the aggregate consumption is equivalent to the aggregate endowment. This would happen if the individual has a high level of wealth and can afford to consume their entire endowment without having to worry about budget constraints.

However, in the context of asset market and Arrow-Debreu equilibrium, it is assumed that all agents are rational and have increasing utility functions. This means that they would always prefer more consumption over less, and their budget constraint would be binding in order to maximize their utility. In this case, the budget constraint would be strictly binding for all agents.

In summary, it is possible for an individual's budget constraint to not be binding while the conditions of asset market clear and market clear are satisfied, but this would not be the case in the context of asset market and Arrow-Debreu equilibrium where increasing utility functions and rationality are assumed. I hope this helps clarify your question.