Non-Walrasian decentralization of the core

• Published in: Journal of mathematical economics Vol. 47; no. 4-5; pp. 610 - 616
• Main Authors: Koutsougeras, Leonidas C., Ziros, Nicholas
• Format: Journal Article
• Language: English
• Published: Amsterdam Elsevier B.V 01-08-2011; Elsevier; Elsevier Sequoia S.A
• Series: Journal of Mathematical Economics
• 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; Decentralization; Nash equilibrium; Asymptotic proximity; Core
• ISSN: 0304-4068; 1873-1538
• DOI: 10.1016/j.jmateco.2011.08.001

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.