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General equilibrium and the emergence of (non)market clearing trading institutions

  • Carlos Alós-Ferrer

    ()

  • Georg Kirchsteiger

    ()

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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File URL: http://hdl.handle.net/10.1007/s00199-009-0466-9
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Article provided by Springer & Society for the Advancement of Economic Theory (SAET) in its journal Economic Theory.

Volume (Year): 44 (2010)
Issue (Month): 3 (September)
Pages: 339-360

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Handle: RePEc:spr:joecth:v:44:y:2010:i:3:p:339-360
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  1. Alós-Ferrer, Carlos & Netzer, Nick, 2010. "The logit-response dynamics," Games and Economic Behavior, Elsevier, vol. 68(2), pages 413-427, March.
  2. 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.
  3. 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.
  4. Mas-Colell, Andreu & Nachbar, John H., 1991. "On the finiteness of the number of critical equilibria, with an application to random selections," Journal of Mathematical Economics, Elsevier, vol. 20(4), pages 397-409.
  5. Carlos Alós-Ferrer & Ana Ania, 2005. "The evolutionary stability of perfectly competitive behavior," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 26(3), pages 497-516, October.
  6. Plott, Charles R, 1982. "Industrial Organization Theory and Experimental Economics," Journal of Economic Literature, American Economic Association, vol. 20(4), pages 1485-1527, December.
  7. Carlos Alós-Ferrer, 2000. "Finite Population Dynamics and Mixed Equilibria," Vienna Economics Papers 0008, University of Vienna, Department of Economics.
  8. Andrew Postlewaite, 1979. "Manipulation via Endowments," Review of Economic Studies, Oxford University Press, vol. 46(2), pages 255-262.
  9. Stahn, Hubert, 1999. "Monopolistic behaviors and general equilibrium: a generalization of Nikaido's work," Journal of Mathematical Economics, Elsevier, vol. 32(1), pages 87-112, August.
  10. 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.
  11. Faias, Marta & Moreno-Garcia, Emma & Pascoa, Mario Rui, 2002. "Real indeterminacy of equilibria and manipulability," Journal of Mathematical Economics, Elsevier, vol. 37(4), pages 325-340, July.
  12. Young, H Peyton, 1993. "The Evolution of Conventions," Econometrica, Econometric Society, vol. 61(1), pages 57-84, January.
  13. Glenn Ellison, 2000. "Basins of Attraction, Long-Run Stochastic Stability, and the Speed of Step-by-Step Evolution," Review of Economic Studies, Oxford University Press, vol. 67(1), pages 17-45.
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