Consider an economy where there is uncertainty about the future. In particular, at the current date t all agents are unsure which of the 3 possible states (!1; !2; !3) will materialize at date t + 1. The probability of state !1 is t(!1) = 1 2 , and of state !2and !3 is t(!2) = t(!3) = 1 4 . There are three stocks in the economy. At time (t + 1) each stock j returns a payo§ Xt+1;j (!i) if state !i materializes. The information about the three stocks is summarized in Table 1.