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Ex-ante is used most commonly in the commercial world, where results of a particular action, or series of actions, are forecast (or intended). The opposite of ex-ante is ex-post (actual) (or ex post). Buying a lottery ticket loses you money ex ante (in expectation), but if you win, it was the right decision ex post. [2]
It has been pointed out by Schmitz (2006) that the property rights approach can be extended to the case of asymmetric information, which may explain ex-post inefficiencies. [16] The property rights approach has also been extended by Chiu (1998) and DeMeza and Lockwood (1998), who allow for different ways to model the renegotiations.
The term internal refers to the fact that the calculation excludes external factors, such as the risk-free rate, inflation, the cost of capital, or financial risk. The method may be applied either ex-post or ex-ante. Applied ex-ante, the IRR is an estimate of a future annual rate of return.
In the case of contracts stated in terms of the nominal interest rate, the real interest rate is known only at the end of the period of the loan, based on the realized inflation rate; this is called the ex-post real interest rate. Since the introduction of inflation-indexed bonds, ex-ante real interest rates have become observable. [2]
However, RSD is not ex-ante PE when the agents have Von Neumann-Morgenstern utilities over random allocations, i.e., lotteries over objects (Note that ex-ante envy-freeness is weaker than ex-post envy-freeness, but ex-ante Pareto-efficiency is stronger than ex-post Pareto-efficiency). As an example, suppose there are three agents, three items ...
Ex-ante envy-freeness is a weakening of envy-freeness used in the setting of fair random assignment. In this setting, each agent receives a lottery over the items; an allocation of lotteries is called ex-ante envy-free if no agent prefers the lottery of another agent, i.e., no agent assigns a higher expected utility to the lottery of another agent.
In this analysis, the nominal rate is the stated rate, and the real interest rate is the interest after the expected losses due to inflation. Since the future inflation rate can only be estimated, the ex ante and ex post (before and after the fact) real interest rates may be different; the premium paid to actual inflation (higher or lower).
Ex-ante Pareto efficiency means that the lottery determined by the process is Pareto-efficient with respect to the expected utilities. That is: no other lottery gives a higher expected utility to one agent and at least as high expected utility to all agents. If some lottery L is ex-ante PE, then it is also ex-post PE. Proof: suppose that one of ...