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Externalities in Economies with Endogenous Sharing Rules

Bich, Philippe; Laraki, Rida (2017), Externalities in Economies with Endogenous Sharing Rules, Economic Theory Bulletin, 5, 2, p. 127-137

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Type
Article accepté pour publication ou publié
Date
2017
Journal name
Economic Theory Bulletin
Volume
5
Number
2
Publisher
Springer
Pages
127-137
Metadata
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Author(s)
Bich, Philippe cc
Centre d'économie de la Sorbonne [CES]
Laraki, Rida cc
Laboratoire d'analyse et modélisation de systèmes pour l'aide à la décision [LAMSADE]
Abstract (EN)
Endogenous sharing rules were introduced by Simon and Zame (Econometrica 58(4):861–872, 1990) to model payoff indeterminacy in discontinuous games. They prove the existence in every compact strategic game of a mixed Nash equilibrium and an associated sharing rule. We extend their result to economies with externalities (Arrow and Debreu in Econometrica 22(3):265–290, 1954) where, by definition, players are restricted to pure strategies. We also provide a new interpretation of payoff indeterminacy in Simon and Zame’s model in terms of preference incompleteness.
Subjects / Keywords
Abstract economies; Generalized games; Endogenous sharing rules; Walrasian equilibrium; Incomplete and discontinuous preferences; Better reply security
JEL
D50 - General
C72 - Noncooperative Games
C62 - Existence and Stability Conditions of Equilibrium
C02 - Mathematical Methods