This paper considers the unobserved endowment economy of Green (1987) with a restriction that agents can walk away from insurance contracts at the beginning of any period and contract with another insurer (one-sided commitment). An equilibrium is derived characterized by a unique, market determined insurance contract with the property that agents never want to walk away from it. I show that trade (or insurance) still occurs and that a non-degenerate long-ran distribution of consumption exists.
- Federal Reserve Bank of Minneapolis. Research Department.
Herunterladbarer InhaltPDF Herunterladen
Download a zip file that contains all the files in this work.