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The WALRAS Algorithm: A Convergent Distributed Implementation of General Equilibrium Outcomes

  • Cheng, John Q
  • Wellman, Michael P

The WALRAS algorithm calculates competitive equilibria via a distributed tatonnement-like process, in which agents submit single-good demand functions to market-clearing auctions. The algorithm is asynchronous and decentralized with respect to both agents and markets, making it suitable for distributed implementation. We present a formal description of this algorithm, and prove that it converges under the standard assumption of gross substitutability. We relate our results to the literature on general equilibrium stability and some more recent work on decentralized algorithms. We present some experimental results as well, particularly for cases where the assumptions required to guarantee convergence do not hold. Finally, we consider some extensions and generalizations to the WALRAS algorithm. Citation Copyright 1998 by Kluwer Academic Publishers.

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Article provided by Society for Computational Economics in its journal Computational Economics.

Volume (Year): 12 (1998)
Issue (Month): 1 (August)
Pages: 1-24

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Handle: RePEc:kap:compec:v:12:y:1998:i:1:p:1-24
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  1. Shoven,John B. & Whalley,John, 1992. "Applying General Equilibrium," Cambridge Books, Cambridge University Press, number 9780521266550, October.
  2. Muellbauer, John, 1976. "Community Preferences and the Representative Consumer," Econometrica, Econometric Society, vol. 44(5), pages 979-99, September.
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  4. Reiter, S. & Simon, C., 1990. "Decentralized Dynamic Processes for Finding Equilibrium," Papers 90-20, Michigan - Center for Research on Economic & Social Theory.
  5. Shafer, Wayne & Sonnenschein, Hugo, 1993. "Market demand and excess demand functions," Handbook of Mathematical Economics, in: K. J. Arrow & M.D. Intriligator (ed.), Handbook of Mathematical Economics, edition 4, volume 2, chapter 14, pages 671-693 Elsevier.
  6. Milgrom, Paul & Roberts, John, 1991. "Adaptive and sophisticated learning in normal form games," Games and Economic Behavior, Elsevier, vol. 3(1), pages 82-100, February.
  7. Takayama,Akira, 1985. "Mathematical Economics," Cambridge Books, Cambridge University Press, number 9780521314985, October.
  8. Hildenbrand, Werner, 1983. "On the "Law of Demand."," Econometrica, Econometric Society, vol. 51(4), pages 997-1019, July.
  9. Chipman, John S., 1974. "Homothetic preferences and aggregation," Journal of Economic Theory, Elsevier, vol. 8(1), pages 26-38, May.
  10. Alan P. Kirman, 1992. "Whom or What Does the Representative Individual Represent?," Journal of Economic Perspectives, American Economic Association, vol. 6(2), pages 117-136, Spring.
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