Aggregate risk sharing and equivalent financial mechanisms in an endowment economy of incomplete participation
This paper examines risk-sharing arrangements associated with two concepts of Pareto optimality: conditional and equal treatment. It also studies how these arrangements are financed. It derives the Arrow-Debreu contingent claim prices under the assumption that there is a clearing house announcing prices such that excess supply and excess demand sum to zero in each state and time period. The clearing house essentially transfers funds from young agents to old agents. The results are related to equivalence results in Chamley and Polemarcharkis (1984), Weiss (1980), and Wallace (1981).
scientific article; zbMATH DE number 2133546