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Balanced equilibrium in pseudo-markets with endowments

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  • Echenique, Federico
  • Miralles, Antonio
  • Zhang, Jun

Abstract

In a variant of Hylland and Zeckhauser (1979)'s model that allows agents to start out with different endowments, we develop a pseudo-market procedure that allows the policymaker to decide to what extent individual endowment differences shall be balanced by the average endowment. Our procedure sidesteps the known non-existence problem of Walrasian equilibria, and finds an efficient and balanced individually-rational allocation. Envy in our procedure is justified in a utilitarian sense: an envying agent's endowment must make a lower contribution to standard weighted utilitarian welfare than that of the envied agent.

Suggested Citation

  • Echenique, Federico & Miralles, Antonio & Zhang, Jun, 2023. "Balanced equilibrium in pseudo-markets with endowments," Games and Economic Behavior, Elsevier, vol. 141(C), pages 428-443.
    • Handle: RePEc:eee:gamebe:v:141:y:2023:i:c:p:428-443
    DOI: 10.1016/j.geb.2023.07.002
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    More about this item

    Keywords

    Discrete allocation; Endowment; Pseudo-market procedure; Balanced individual rationality;
    All these keywords.

    JEL classification:

    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design
    • D50 - Microeconomics - - General Equilibrium and Disequilibrium - - - General
    • D60 - Microeconomics - - Welfare Economics - - - General

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