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Decentralized Pricing and the equivalence between Nash and Walrasian equilibrium

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  • Mandel, Antoine
  • Gintis, Herbert

Abstract

We introduce, in the standard exchange economy model, market games in which agents use private prices as strategies. We give conditions on the game form that ensure that the only strict Nash equilibria of the game are the competitive equilibria of the underlying economy. This equivalence result has two main corollaries. First, it adds to the evidence that competitive equilibria can be strategically stable even in small economies. Second, it implies that competitive equilibria have good local stability properties under a large class of evolutionary learning dynamics.

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  • Mandel, Antoine & Gintis, Herbert, 2016. "Decentralized Pricing and the equivalence between Nash and Walrasian equilibrium," Journal of Mathematical Economics, Elsevier, vol. 63(C), pages 84-92.
    • Handle: RePEc:eee:mateco:v:63:y:2016:i:c:p:84-92
    DOI: 10.1016/j.jmateco.2015.12.008
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    Cited by:

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    2. Marian Leimbach & Anselm Schultes & Lavinia Baumstark & Anastasis Giannousakis & Gunnar Luderer, 2017. "Solution algorithms for regional interactions in large-scale integrated assessment models of climate change," Annals of Operations Research, Springer, vol. 255(1), pages 29-45, August.
    3. Hudik, Marek, 2021. "Push factors of endogenous institutional change," Journal of Economic Behavior & Organization, Elsevier, vol. 189(C), pages 504-514.

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