Emergent Effective Collusion in an Economy of Perfectly Rational Competitors
AbstractWe consider a simple model of rational agents competing in a single product market described by simple linear demand curve. Contrary to accepted economic theory, the agents' production levels synchronise in the absence of conscious collusion, leading to a downward spiraling of market total production until the monopoly price level is realised. This is in stark contrast to the standard predictions of an ideal rational competitive market. Some form of randomness in the form of agent irrationality, or non-synchronous updates is needed to break this emergent "collusion"
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Bibliographic InfoPaper provided by arXiv.org in its series Papers with number nlin/0411006.
Date of creation: Nov 2004
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- Keen, Steve, 2004. "Deregulator: Judgment Day for microeconomics," Utilities Policy, Elsevier, vol. 12(3), pages 109-125, September.
- George J. Stigler, 1957. "Perfect Competition, Historically Contemplated," Journal of Political Economy, University of Chicago Press, vol. 65, pages 1.
- Challet, D. & Zhang, Y.-C., 1997. "Emergence of cooperation and organization in an evolutionary game," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 246(3), pages 407-418.
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