Symmetry breakings in Malinvaud's model with individual risks
Abstract
This paper investigates the existence of asymmetric equilibria in Malinvaud's [Malinvaud, E., 1973. Markets for an exchange economy with individual risks. Econometrica 41, 383–410] model of a pure exchange economy with individual risks. Agents face identical individual risks. Their utility functions only depend on their individual state; the only difference with Malinvaud's original formulation is that there exists one good for which some aggregate component of the risk is introduced through endowments. Agents are described by totally symmetric characteristics but yet can come out of the exchange process with asymmetric allocations (there might be unequal treatment of equal agents): the generic existence of asymmetric equilibria is shown. In addition, robust examples of both existence and non-existence of asymmetric equilibria in Malinvaud's original formulation (with “pure” individual risks) are given.