The Edgeworth exchange formulation of bargaining models and market experiments
AbstractWe construct Edgeworth exchange economies equivalent to demand and supply environments typically used in bargaining models and market experiments. This formulation clearly delineates environment, institution, and behavior for these models and experiments. To illustrate, we examine results by Gode and Sunder, who simulate random behavior in a double auction and argue that this institution leads to an efficient allocation, even in the absence of rationality. We use the Edgeworth exchange representation of their economic environment to demonstrate that they model individually rational behavior, and show that their model is a special case of theoretical results by Hurwicz, Radner, and Reiter.
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Bibliographic InfoPaper provided by EconWPA in its series Microeconomics with number 0304004.
Length: 12 pages
Date of creation: 10 Apr 2003
Date of revision:
Note: Type of Document - PDF file (from LaTeX); prepared on MikTex (LaTeX for PC); to print on HP/PostScript; pages: 12 ; figures: included. This paper is a substantial revision of ``A General Equilibrium Structure for Induced Supply and Demand" (UCSD Economics Discussion Paper 96-35).
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Double auction; Market experiment; Edgeworth exchange; Bounded rationality;
Find related papers by JEL classification:
- C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
- C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
- D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
- D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies
This paper has been announced in the following NEP Reports:
- NEP-ALL-2003-04-13 (All new papers)
- NEP-EXP-2003-04-13 (Experimental Economics)
- NEP-GTH-2003-04-13 (Game Theory)
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