Abstract
WALRASIAN ALLOCATIONS WITHOUT PRICE-TAKING BEHAVIOR
Roberto Serrano and Oscar Volij
June 1998
Consider an exchange economy with a finite number of agents,
who are arbitragers, in that they try to upset allocations imagining
plausible beneficial trades. Their thought process
is interactive, in that agents are conscious that the others are also
going through the same steps. With this introspective process,
each agent constructs a supermarket, i.e., a set of
bundles that he considers achievable, in the sense that a sequence of
plausible trades with
other agents yields those bundles. We shed additional light on a result of
Dagan (1996), by showing that Walrasian allocations can be characterized
also as those where each agent chooses optimally from his supermarket.
In addition, we extend the analysis to economies without short sales,
where the characterization of Walrasian allocations is also obtained. Our
analysis provides a different behavioral assumption for Walrasian
allocations and connects with the core convergence theorem.
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This page last updated on: August 11, 1998