Equilibrium theory with satiable and non-ordered preferences

Abstract This paper investigates the existence of equilibrium in an economy where preferences may be non-ordered and possibly satiable. Remarkably, satiation is allowed to occur only inside the set of feasible and individually rational allocations. One important class of its applications is new developments of asset pricing models where Knightian uncertainty makes preferences incomplete while the absence of a riskless asset makes them satiable. Thus, the result of the paper extends Won et al. (2008) to the case that preferences need be neither complete nor transitive.Equilibrium Non-ordered preferences Knightian uncertainty Satiation CAPM Risky assets