Valuation in infinite-horizon sequential markets with portfolio constraints

B-Tier
Journal: Economic Theory
Year: 2002
Volume: 20
Issue: 1
Pages: 189-198

Score contribution per author:

2.011 = (α=2.01 / 1 authors) × 1.0x B-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

We develop a theory of valuation of assets in sequential markets over an infinite horizon and discuss implications of this theory for equilibrium under various portfolio constraints. We characterize a class of constraints under which sublinear valuation and a modified present value rule hold on the set of non-negative payoff streams in the absence of feasible arbitrage. We provide an example in which valuation is non-linear and the standard present value rule fails in incomplete markets. We show that linearity and countable additivity of valuation hold when markets are complete. We present a transversality constraint under which valuation is linear and countably additive on the set of all payoff streams regardless of whether markets are complete or incomplete.

Technical Details

RePEc Handle
repec:spr:joecth:v:20:y:2002:i:1:p:189-198
Journal Field
Theory
Author Count
1
Added to Database
2026-02-02