Ken Arrow and Maurice Allais famously developed the Theory of Incomplete Markets in the late 1940s, provacatively suggesting that welfare-optimal intertemporal equilibria might be secured by a market sufficiently rich in contingent claims. While the conception of optimality with which they operated was vacuuous, as shown in several of the 'High Theory' papers assembled in the Module of that name at this site, It is nevertheless helpful, indeed a justice gain, to construct markets for trading risks that at present cannot be laid-off. These papers, written while Hockett was completing doctoral work with Yale's Robert Shiller, show how to develop derivative financial instruments for ordinary people rather than big Wall Street investment houses.
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