Undescribable Events

Arbeitspapier

We develop a model of undescribable events. Examples of events that are well understood by economic agents but are prohibitively difficult to describe in advance abound in real-life. This notion has also pervaded a substantial amount of economic literature. We put forth a model of such events using a simple co-insurance problem as backdrop. Undescribable events in our model are understood by economic agents - their consequences and probabilities are known - but are such that every finite description of such events necessarily leaves out relevant features that have a non-negligible impact on the parties' expected utilities. We also show that two key ingredients of our model - probabilities that are finitely additive but fail countable additivity, and a state space that is small (discrete in our model) in a measure-theoretic sense -are necessary ingredients of any model of undescribable events that delivers our results.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 1092

Classification and Topics

• Classification: Wirtschaft
• Subject: undescribable events ; incomplete contracts ; finite invariance ; fine variability

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Al-Najjar, Nabil I. ; Anderlini, Luca ; Felli, Leonardo
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2003

Further information

• Handle: http://hdl.handle.net/10419/76582
• Last update: 10.03.2025, 11:43 AM CET