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

  • John Q. Cheng

    (University of Michigan)

  • Michael P. Wellman

    (University of Michigan)

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.

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Paper provided by EconWPA in its series Computational Economics with number 9508001.

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Length: 23 pages
Date of creation: 03 Aug 1995
Date of revision:
Handle: RePEc:wpa:wuwpco:9508001
Note: Type of Document - postscript; pages: 23 ; figures: included. Submitted for publication
Contact details of provider: Web page: http://128.118.178.162

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  1. Muellbauer, John, 1976. "Community Preferences and the Representative Consumer," Econometrica, Econometric Society, vol. 44(5), pages 979-99, September.
  2. Hildenbrand, Werner, 1983. "On the "Law of Demand."," Econometrica, Econometric Society, vol. 51(4), pages 997-1019, July.
  3. 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.
  4. Stanley Reiter & Carl P. Simon, 1990. "Decentralized Dynamic Processes for Finding Equilibrium," Discussion Papers 865, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  5. 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.
  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. repec:cup:cbooks:9780521319867 is not listed on IDEAS
  8. Chipman, John S., 1974. "Homothetic preferences and aggregation," Journal of Economic Theory, Elsevier, vol. 8(1), pages 26-38, May.
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