This paper formulates two alternative equilibrium concepts in the large household model: one which allows individual household agents to make choices in their separate meetings, and the other which commits individual household agents to contingent actions prior to their meetings. In the first formulation, large converts a model with nonlinear preferences for the household into one with quasi-linear preferences for the individual household's agents, which is critical to make degeneracy--all households experience the same distribution of meeting outcomes--as an equilibrium; in the second formulation, commitment instead of large is the critical factor.
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Paper provided by Cornell University, Center for Analytic Economics in its series Working Papers with number
07-01.
Find related papers by JEL classification: D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
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