Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/122181 
Year of Publication: 
2015
Series/Report no.: 
IHS Economics Series No. 313
Publisher: 
Institute for Advanced Studies (IHS), Vienna
Abstract: 
We propose a new welfare criterion that allows us to rank alternative financial market structures in the presence of belief heterogeneity. We analyze economies with complete and incomplete financial markets and/or restricted trading possibilities in the form of borrowing limits or transaction costs. We describe circumstances under which various restrictions on financial markets are desirable according to our welfare criterion.
Subjects: 
social welfare
heterogeneous beliefs
spurious unanimity
speculation
pessimism
incomplete markets
financial regulation
Document Type: 
Working Paper

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