Real indeterminacy of equilibria and manipulability
type: Item
instance of: scholarly article
title: Real indeterminacy of equilibria and manipulability
zbMATH Open document ID: 1031.91048
DOI: 10.1016/S0304-4068(02)00037-X
author: Marta Faias
author: Emma Moreno-García
author: Mário R. Páscoa
published in: Journal of Mathematical Economics
publication date: 2003-03-23T00:00:00Z
review text: The authors analyze different approaches to the investigation of indeterminacy of equilibria in incomplete financial markets and propose a new equlibrium selection mechanism in markets with nominal assets. They study whether the presence of market power in the commodity market allows for an specific equilibrium to prevail. They consider initial endowment allocations where some agents have a market power in certain states of nature and which will encourage them to manipulate prices. It is assumed that endowments of the first commodity are held by one agent, in each state of nature. Given a price profile for the first commodity in every state, chosen by monopolists, a model with numeraire assets is obtained, where real equilibrium allocations are locally unique. A price game among the monopolists is formulated, considering that the players maximize their expected utility functions and that they anticipate the selection of the Walrasian equlibrium correspondence. An equlibrium for this price game can be interpreted as a selection mechanism from the equlibria for the original model with financial assets. The existence of an equilibrium for the above game relies crucially on the continuity of each player's pay-off function. From the continuity of pay-off functions, the existence of equilibria in mixed strategies for the price game is obtained. Finally, exploiting the Liapunov convexification theorem and the particular structure of the game, the authors obtain the generic existence of an approximate equlibrium in pure strategies.
Mathematics Subject Classification ID: 91B28
Mathematics Subject Classification ID: 91A18
zbMATH DE Number: 1886847
zbMATH Keywords: financial assets
zbMATH Keywords: incomplete markets
zbMATH Keywords: price game
zbMATH Keywords: purification of equilibria
zbMATH Keywords: continuous random selection
reviewed by: Yuliya S. Mishura
MaRDI profile type: Publication
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full work available at URL: s0304-4068(02)00037-x
OpenAlex ID: W1970556367
description: scientific article; zbMATH DE number 1886847