Non-Walrasian decentralization of the core

We show that in large finite economies, core allocations can be approximately decentralized as Nash (rather than Walras) equilibrium. We argue that this exercise is an essential complement to asymptotic core equivalence results, because it implies that in some approximate sense individual attempts t...

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Bibliographic Details
Published in:Journal of mathematical economics 2011-08, Vol.47 (4-5), p.610-616
Main Authors: Koutsougeras, Leonidas C., Ziros, Nicholas
Format: Article
Language:English
Subjects:
Allocations
Asymptotic proximity
Core
Core Nash equilibrium Asymptotic proximity Decentralization
Decentralization
Economic models
Enterprise games
Game theory
General economic equilibrium
Mathematical economics
Nash equilibrium
Prices
Pricing
Strategic studies
Studies
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Summary:We show that in large finite economies, core allocations can be approximately decentralized as Nash (rather than Walras) equilibrium. We argue that this exercise is an essential complement to asymptotic core equivalence results, because it implies that in some approximate sense individual attempts to manipulate the decentralizing prices cannot be beneficial, which fits precisely the interpretation of asymptotic core convergence, namely the emergence of price taking. ► This article associates core allocations to Nash outcomes of strategic market games. ► This is achieved by using sequences of economies with increasing numbers of agents. ► Result 1: every core allocation can be decentralized as an approximate Nash equilibrium. ► Result 2: every Nash equilibrium is an approximate core allocation.
ISSN:0304-4068
1873-1538
DOI:10.1016/j.jmateco.2011.08.001