Variants of an exchange economy

In this chapter we study two variants of the model of an exchange economy that demonstrate the richness of the model. In the first variant we insert into the framework the basic model of supply and demand for a single indivisible good (with which you may be familiar from an introductory course in economics). In the second variant we use the framework to capture a situation in which individuals face uncertainty about the future resources. This variant is used to analyze markets for insurance and bets.