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Microeconomic foundations for the biased interaction game

Author

Listed:
  • Mercy, Phil

    (Freelance)

  • Neil, Martin

Abstract

The theory of microeconomics is revisited to gain insight into the underlying mechanics of sub-optimal systems in general. It challenges the prevailing view that efficient markets naturally arise from free competition and instead reformulates the market to reveal mechanisms whereby inefficient operation can naturally emerge. In particular, it shows how individual influence or power, and market scarcity inevitably lead to biased markets for emergent system operation that is anything but efficient. The paper concludes by incorporating these insights into a game-theoretic treatment of market interactions and proves this is simply a special case of the biased interaction game.

Suggested Citation

  • Mercy, Phil & Neil, Martin, 2026. "Microeconomic foundations for the biased interaction game," SocArXiv qge3k_v1, Center for Open Science.
    • Handle: RePEc:osf:socarx:qge3k_v1
    DOI: 10.31219/osf.io/qge3k_v1
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    References listed on IDEAS

    as
    1. Daniel Kahneman & Peter P. Wakker & Rakesh Sarin, 1997. "Back to Bentham? Explorations of Experienced Utility," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(2), pages 375-406.
    2. Jan De Loecker & Jan Eeckhout & Gabriel Unger, 2020. "The Rise of Market Power and the Macroeconomic Implications [“Econometric Tools for Analyzing Market Outcomes”]," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 135(2), pages 561-644.
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