Theory and Decision

, Volume 51, Issue 2, pp 173–181

A No-Trade Theorem under Knightian Uncertainty with General Preferences

  • Chenghu Ma

DOI: 10.1023/A:1015550925961

Cite this article as:
Ma, C. Theory and Decision (2001) 51: 173. doi:10.1023/A:1015550925961


This paper derives a no-trade theorem under Knightian uncertainty, which generalizes the theorem of Milgrom and Stokey (1982, Journal of Economic Theory 26, 17) by allowing general preference relations. It is shown that the no-trade theorem holds true as long as agents' preferences are dynamically consistent in the sense of Machina and Schmeidler (1991, Econometrica 60, 745), and satisfies the so-called piece-wise monotonicity axiom. A preference satisfying the piece-wise monotonicity axiom does not necessarily imply the additive utility representation, nor is necessarily based on beliefs.

UncertaintyPiecewise monotonicityGeneralized expected utility

Copyright information

© Kluwer Academic Publishers 2001

Authors and Affiliations

  • Chenghu Ma
    • 1
  1. 1.Department of Accounting, Finance and ManagementUniversity of EssexColchester, EssexUK