English, Article, Journal or magazine article edition: Competitive Behavior in Market Games: Evidence and Theory Alexander Matros; John Duffy; Ted Temzelides

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Bookmark: http://trove.nla.gov.au/version/68799
Physical Description
  • preprint
Language
  • English

Edition details

Title
  • Competitive Behavior in Market Games: Evidence and Theory
Author
  • Alexander Matros
  • John Duffy
  • Ted Temzelides
Physical Description
  • preprint
Notes
  • We explore whether competitive outcomes arise in an experimental implementation of a market game, introduced by Shubik (1972). Market games obtain Pareto inferior (strict) Nash equilibria, in which some markets are closed. We find that subjects do not coordinate on autarkic Nash equilibria, but favor more efficient Nash equilibria in which all markets are open. As the number of subjects participating in the market game increases, the Nash equilibrium they achieve approximates the associated Walrasian equilibrium of the underlying economy. Motivated by these findings, we investigate theoretically whether evolutionary forces lead to Walrasian outcomes in market games. We introduce a strong version of evolutionary stable strategies (SESS) for finite populations. Our concept requires stability against deviations by coalitions of agents. A small coalition of trading agents is sufficient for Pareto-improving trade to be generated. In addition, provided that agents lack market power, Nash equilibria corresponding to approximate competitive outcomes constitute the only approximate SESS.
  • RePEc:pit:wpaper:366
  • RePEc:pit:wpaper:201
Language
  • English
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