General Equilibrium and the Emergence of (Non) Market Clearing Trading Institutions

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General Equilibrium and the Emergence of (Non) Market Clearing Trading Institutions

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Alos-Ferrer, Carlos
Kirchsteiger, Georg

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Abstract

We consider a pure exchange economy, where for each good several trading institutions are available, only one of which is market-clearing. The other feasible trading institutions lead to rationing. To learn on which trading institutions to coordinate, traders follow behavioural rules of thumb that are based on the past performances of the trading institutions. Given the choice of institutions, market outcomes are determined by an equilibrium concept that allows for rationing. We find that full coordination on the market-clearing institutions without any rationing is a stochastically stable outcome, independently of the characteristics of the alternative available institutions. We also find, though, that coordination on other, non-market-clearing institutions with rationing can be stochastically stable.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 5795.

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Date of creation: Sep 2006
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Handle: RePEc:cpr:ceprdp:5795

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Find related papers by JEL classification:
C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
C83 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Survey Methods; Sampling Methods
D4 - Microeconomics - - Market Structure and Pricing
D5 - Microeconomics - - General Equilibrium and Disequilibrium
L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

This paper has been announced in the following NEP Reports:

NEP-ALL-2006-10-28 (All new papers)
NEP-GTH-2006-10-28 (Game Theory)

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Ellison, Glenn, 2000. "Basins of Attraction, Long-Run Stochastic Stability, and the Speed of Step-by-Step Evolution," Review of Economic Studies, Blackwell Publishing, vol. 67(1), pages 17-45, January.
Carlos Alós-Ferrer, 2000. "Finite Population Dynamics and Mixed Equilibria," Vienna Economics Papers 0008, University of Vienna, Department of Economics. [Downloadable!]
Carlos Alós-Ferrer & Ana Ania, 2005. "The evolutionary stability of perfectly competitive behavior," Economic Theory, Springer, vol. 26(3), pages 497-516, October. [Downloadable!] (restricted)
Kirchsteiger,Georg & Alós-Ferrer,Carlos, 2003. "Does Learning Lead to Coordination on Market Clearing Institutions?," Research Memoranda 053, Maastricht : METEOR, Maastricht Research School of Economics of Technology and Organization. [Downloadable!]
Other versions:
- Carlos Alós-Ferrer & Georg Kirchsteiger, 2003. "Does Learning Lead to Coordination in Market Clearing Institutions?," Vienna Economics Papers 0319, University of Vienna, Department of Economics. [Downloadable!]
Alvin E. Roth & Axel Ockenfels, 2002. "Last-Minute Bidding and the Rules for Ending Second-Price Auctions: Evidence from eBay and Amazon Auctions on the Internet," American Economic Review, American Economic Association, vol. 92(4), pages 1093-1103, September. [Downloadable!]
Other versions:
- Alvin E. Roth & Axel Ockenfels, . "Last-Minute Bidding and the Rules for Ending Second-Price Auctions: Evidence from eBay and Amazon Auctions on the Internet," Papers on Strategic Interaction 2002-32, Max Planck Institute of Economics, Strategic Interaction Group. [Downloadable!]
Young, H Peyton, 1993. "The Evolution of Conventions," Econometrica, Econometric Society, vol. 61(1), pages 57-84, January. [Downloadable!] (restricted)
Plott, Charles R, 1982. "Industrial Organization Theory and Experimental Economics," Journal of Economic Literature, American Economic Association, vol. 20(4), pages 1485-1527, December. [Downloadable!] (restricted)
Dreze, Jacques H, 1975. "Existence of an Exchange Equilibrium under Price Rigidities," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 16(2), pages 301-20, June. [Downloadable!] (restricted)

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