Complex sentence: The theory of incomplete markets is an extension of the general equilibrium approach to intertemporal economies with uncertainty, where the set of available contracts which can be used to transfer wealth across time is limited relative to the possible probabilistic states that an economy might find itself in.
Split into simpler sentences: The theory of incomplete markets is an extension of the general equilibrium approach to intertemporal economies with uncertainty. It applies to the the set of available contracts which can be used to transfer wealth across time as limited to the possible probabilistic states that an economy might find itself in.