Stochastic stability in the Scarf economy
We present a mathematical model for the analysis of the bargaining games based on private prices used by Gintis to simulate the dynamics of prices in exchange economies, see [Gintis 2007]. We then characterize, in the Scarf economy, a class of dynamics for which the Walrasian equilibrium is the only stochastically stable state. Hence, we provide dynamic foundations for general equilibrium for one of the best-known example of instability of the tâtonement process.
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- Antoine Mandel & Nicola Botta, 2009. "A note on Herbert Gintis' "Emergence of a Price System from Decentralized Bilateral Exchange"," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00634656, HAL.
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01-12-074, Santa Fe Institute.
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- Roberto Serrano & Oscar Volij, 2003. "MISTAKE IN COOPERATION:the Stochastic Stability of Edgeworth's Recontracting," Working Papers 2003-23, Brown University, Department of Economics.
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- Scarf, Herbert, 1969. "An Example of an Algorithm for Calculating General Equilibrium Prices," American Economic Review, American Economic Association, vol. 59(4), pages 669-77, Part I Se.
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- Bottazzi, Jean-Marc, 1994. "Accessibility of Pareto optima by Walrasian exchange processes," Journal of Mathematical Economics, Elsevier, vol. 23(6), pages 585-603, November.
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