UNSPECIFIED (2004) Local coordination and market equilibria. JOURNAL OF ECONOMIC THEORY, 114 (2). pp. 255-279. ISSN 0022-0531

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Abstract

We reformulate the local stability analysis of market equilibria in a competitive market as a local coordination problem in a market game, where the map associating market prices to best-responses of all traders is common knowledge and well-defined both in and out of equilibrium. Initial expectations over market variables differ from their equilibrium values and are not common knowledge. This results in a coordination problem as traders use the structure of the market game to converge back to equilibrium. We analyse a simultaneous move and a sequential move version of the market game and explore the link with local rationalizability. (C) 2003 Elsevier Inc. All rights reserved.

Item Type:	Journal Article
Subjects:	H Social Sciences > HC Economic History and Conditions
Journal or Publication Title:	JOURNAL OF ECONOMIC THEORY
Publisher:	ACADEMIC PRESS INC ELSEVIER SCIENCE
ISSN:	0022-0531
Date:	February 2004
Volume:	114
Number:	2
Number of Pages:	25
Page Range:	pp. 255-279
Publication Status:	Published
URI:	http://wrap.warwick.ac.uk/id/eprint/8795

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