Correlated Equilibria in Competitive Market Games
AbstractWe investigate properties of correlated equilibria in competitive, pure-exchange market games. We prove that: 1) the game defined in Schmeidler (1980) always admits the no-trade issue as mixed equilibrium outcome; 2) non-pure correlated equilibria may exist in every competitive strategic market game, and share very "bad" properties (indeterminacy and Pareto-inefficiency), calling for some way to purify them. We then interpret correlated equilibria as strategic sunspots resulting from a strategic incompleteness of markets, due to the fact that players are unable to insure themselves against strategies played by their opponents.
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Bibliographic InfoPaper provided by UniversitÃ© PanthÃ©on-Sorbonne (Paris 1) in its series Papiers d'Economie MathÃ©matique et Applications with number 97.83.
Length: 21 pages
Date of creation: 1997
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