Abstract

http://ssrn.com/abstract=1270308
 
 

References (38)



 
 

Citations (4)



 


 



Mistakes in Cooperation: The Stochastic Stability of Edgeworth's Recontracting


Roberto Serrano


Brown University

Oscar Volij


Ben-Gurion University of the Negev - Department of Economics


Economic Journal, Vol. 118, Issue 532, pp. 1719-1741, October 2008

Abstract:     
We analyse a dynamic trading process of coalitional recontracting in an exchange economy with indivisible goods, where agents may make mistakes with small probability. According to this process, the resistance of a transition from one allocation to another is a function of the number of agents who make mistakes and of the seriousness of each mistake. If preferences are always strict, the unique stochastically stable state is the competitive equilibrium allocation. In economies with indifferences, non-core cycles are sometimes stochastically stable, while some core allocations are not. The robustness of these results is confirmed in a weak coalitional recontracting process.

Number of Pages in PDF File: 23

Accepted Paper Series





Date posted: September 19, 2008  

Suggested Citation

Serrano, Roberto and Volij, Oscar, Mistakes in Cooperation: The Stochastic Stability of Edgeworth's Recontracting. Economic Journal, Vol. 118, Issue 532, pp. 1719-1741, October 2008. Available at SSRN: http://ssrn.com/abstract=1270308 or http://dx.doi.org/10.1111/j.1468-0297.2008.02187.x

Contact Information

Roberto Serrano (Contact Author)
Brown University ( email )
64 Waterman Street
Providence, RI 02912
United States
401-863-1036 (Phone)
401-863-1970 (Fax)
Oscar Volij
Ben-Gurion University of the Negev - Department of Economics ( email )
Beer-Sheva 84105
Israel
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