Stochastic Stability in the Scarf Economy

Journal article: We present a mathematical model for the analysis of the bargaining games based on private prices used by Gintis to simulate the dynamics of prices in exchange economies in Gintis (2007). We then characterize, in the Scarf economy, a class of dynamics for which the Walrasian equilibrium is the only stochastically stable state. Hence, we provide dynamic foundations for general equilibrium for one of the best-known example of instability of the tâtonement process.

Author(s)

Antoine Mandel, Herbert Gintis

Journal
  • Mathematical Social Sciences
Date of publication
  • 2014
Keywords
  • Stochastic Stability
  • General Equilibrium
Pages
  • 44-49
Version
  • 1
Volume
  • 67