The Arbitrage Pricing Theorem with Incomplete Preferences

Abstract

This paper proves existence of equilibrium and the arbitrage pricing theorem for an asset exchange economy, where the individual's preferences may be incomplete or intransitive. This extends existing results to a more general set of individual preferences. We also prove the arbitrage pricing theorem for a theory of choice under uncertainty by Bewley [1986]. These preferences model Knightian uncertainty by allowing for the possibility that preferences are incomplete.Incomplete Preferences, Equilibrium Existence, Arbitrage Pricing Theorem, Knightian Uncertainty