Abstract

The assumption of an endogenously determined information flow in a dynamically complete markets model has dramatic effects on the theory of general equilibrium. It has already been shown in previous papers that the choices of agents with regard of information filtration can affect markets structure. This means that the economy can be taken from a Pareto optimal to a sub-optimal equilibrium, in which only the agents who choose to modify markets structure are strictly better off. In this paper it is shown that if the information filtration is determined endogenously in a dinamically complete markets model, then, because of non cooperative strategic considerations, some agents always decide to modify markets structure towards incompleteness. This is true both in case they believe that they will be better off, and in case they believe that they will be worse off.