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Evolution of Trading Structures

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  • Yannis M. Ioannides

Abstract

This paper reviews the evolution of trading structures by examining two pertinent strands in the literature on economics with interacting agents, one, works that presume a specified topology of interactions among agents, and two, works that let random mechanisms determine that topology. The papr reviews interactive discrete choice models in isotropic settings and proposes extensions within certain stylized anisotopic settings which are particularly interesting for economists. In particular, circular patterns of interaction highlight the role of money and credit; tree-type settings depict Walrasian interactions. The paper suggests that the random topology of interaction approach, which as employed analyses of sizes of trading gorups and thus exploit the full range of possible topological properties of trading structures. The paper proposes an integration of those approaches which is intended to exploit their natural complementaries. In the simplest possible version, our sythesis involves individual decisions and expectations, randomness, and nature combinng to fix an initial "primordial" topology of interaction. The dynamics of interaction move the economy from then on. The evolution of trading structures depends criticlaly upon multiplicity and stability properties of equilibrium configurations of the interaction model. The paper addresses a number of additional topics, including matching models, spatial aspects of the evolution of trading structures and issues of statistical inference.

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  • Yannis M. Ioannides, 1996. "Evolution of Trading Structures," Working Papers 96-04-020, Santa Fe Institute.
    • Handle: RePEc:wop:safiwp:96-04-020
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    Cited by:

    1. Horst, Ulrich & Scheinkman, Jose A., 2006. "Equilibria in systems of social interactions," Journal of Economic Theory, Elsevier, vol. 130(1), pages 44-77, September.
    2. Tesfatsion, Leigh, 1995. "A Trade Network Game with Endogenous Partner Selection," ISU General Staff Papers 199505010700001034, Iowa State University, Department of Economics.
    3. Randal J. Verbrugge, 1998. "Local Complementarities and Aggregate Fluctuations," Macroeconomics 9809016, University Library of Munich, Germany, revised 30 Sep 1998.
    4. Tesfatsion, Leigh, 1998. "Gale-Shapley Matching in an Evolutionary Trade Network Game," ISU General Staff Papers 199804010800001041, Iowa State University, Department of Economics.
    5. Yannis Ioannides, 2006. "Topologies of social interactions," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 28(3), pages 559-584, August.
    6. Rama Cont & Jean-Philippe Bouchaud, 1997. "Herd behavior and aggregate fluctuations in financial markets," Science & Finance (CFM) working paper archive 500028, Science & Finance, Capital Fund Management.
    7. I. V. Evstigneev & M. I. Taksar, 2001. "Stochastic Economies with Locally Interacting Agents," Working Papers 01-03-018, Santa Fe Institute.
    8. Leigh TESFATSION, 1995. "How Economists Can Get Alife," Economic Report 37, Iowa State University Department of Economics.
    9. Allen Wilhite, 2000. "Self-Organizing Production And Exchange," Computing in Economics and Finance 2000 273, Society for Computational Economics.
    10. Allen Wilhite, 2003. "Self-Organizing Production and Exchange," Computational Economics, Springer;Society for Computational Economics, vol. 21(1), pages 107-123, February.
    11. Rama CONT & Jean-Philippe BOUCHAUD, 1997. "Herd behavior and aggregate fluctuations in financial markets," Finance 9712008, University Library of Munich, Germany, revised 06 Jan 1998.
    12. Guido Fioretti, 2002. "Knowledge and Structure," Industrial Organization 0207011, University Library of Munich, Germany.

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