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Correlated Equilibria in Competitive Market Games


  • Giraud, G.


We 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.

Suggested Citation

  • Giraud, G., 1997. "Correlated Equilibria in Competitive Market Games," Papiers d'Economie Mathématique et Applications 97.83, Université Panthéon-Sorbonne (Paris 1).
  • Handle: RePEc:fth:pariem:97.83

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    References listed on IDEAS

    1. Kimball, Miles S, 1990. "Precautionary Saving in the Small and in the Large," Econometrica, Econometric Society, vol. 58(1), pages 53-73, January.
    2. Chateauneuf, Alain & Cohen, Michele & Meilijson, Isaac, 2004. "Four notions of mean-preserving increase in risk, risk attitudes and applications to the rank-dependent expected utility model," Journal of Mathematical Economics, Elsevier, vol. 40(5), pages 547-571, August.
    3. Yaari, Menahem E, 1987. "The Dual Theory of Choice under Risk," Econometrica, Econometric Society, vol. 55(1), pages 95-115, January.
    4. Chateauneuf, Alain & Cohen, Michele, 1994. "Risk Seeking with Diminishing Marginal Utility in a Non-expected Utility Model," Journal of Risk and Uncertainty, Springer, vol. 9(1), pages 77-91, July.
    5. Quiggin, John, 1982. "A theory of anticipated utility," Journal of Economic Behavior & Organization, Elsevier, vol. 3(4), pages 323-343, December.
    6. Quiggin John & Wakker Peter, 1994. "The Axiomatic Basis of Anticipated Utility: A Clarification," Journal of Economic Theory, Elsevier, vol. 64(2), pages 486-499, December.
    7. Allais Maurice, 1990. "Cardinal Utility," Journal des Economistes et des Etudes Humaines, De Gruyter, vol. 1(2), pages 1-38, June.
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    More about this item



    JEL classification:

    • D41 - Microeconomics - - Market Structure, Pricing, and Design - - - Perfect Competition
    • D52 - Microeconomics - - General Equilibrium and Disequilibrium - - - Incomplete Markets
    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty


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