Abstract

This paper studies an economy whose agents perceive their consumption possibilities subjectively, and whose preferences are defined on what they subjectively experience, rather than on those alternatives that are objectively present. The model of agents' perceptions is based on intuitionistic logic. Roughly, this means that agents reason constructively: a solution to a problem exists only if there is a construction by which the problem can be solved. The theorems that can be proved determine how an agent perceives a set of alternatives. A dual model relates perceived alternatives to a shared language, which the agents use in trading. So perceptions relate objective alternatives to an agent's subjective view of them, and reporting dually relates an agent's subjective world to a shared language. It turns out that an appropriately modified notion of competitive equilibrium always exists. However, in contrast with standard results in economic theory, competitive equilibrium need not be efficient