Universally Stable Adjustment Processes: A Unifying Approach

30 Pages Posted: 16 Aug 2000  

P. Jean-Jacques Herings

Maastricht University

Date Written: February 2000

Abstract

Both in game theory and in general equilibrium theory there exists a number of universally stable adjustment processes. In game theory these processes typically serve the role of selecting a Nash equilibrium. Examples are the tracing procedure of Harsanyi and Selten or the equilibrium selection procedure proposed by McKelvey and Palfrey. In general equilibrium the processes are adjustment rules by which an auctioneer can clear all markets. Examples are the processes studied by Smale, Kamiya, van der Laan and Talman, and Herings. The underlying reasons for convergence have remained rather mysterious in the literature, and convergence of different processes has seemed unrelated. This paper shows that convergence of all these processes relies on Browder's fixed point theorem.

Keywords: Adjustment processes, game theory, general equilibrium, universal convergence

JEL Classification: C62, C63, C68, C72

Suggested Citation

Herings, P. Jean-Jacques, Universally Stable Adjustment Processes: A Unifying Approach (February 2000). Available at SSRN: https://ssrn.com/abstract=221748 or http://dx.doi.org/10.2139/ssrn.221748

P. Jean-Jacques Herings (Contact Author)

Maastricht University ( email )

Department of Economics
P.O. Box 616
6200 MD Maastricht
Netherlands
+31 43 3883636 (Phone)
+31 43 3884878 (Fax)

HOME PAGE: http://www.personeel.unimaas.nl/p.herings/herings.htm

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