Learning Competitive Equilibrium

Posted: 13 Jun 2006 Last revised: 20 Mar 2019

See all articles by Sean Crockett

Sean Crockett

City University of New York, Baruch College - Zicklin School of Business - Department of Economics and Finance

Shyam Sunder

Yale University - School of Management; Yale University - Cowles Foundation

Stephen Spear

Carnegie Mellon University - Financial Economics

Abstract

We consider a pure exchange economy repeated for an indefinite number of periods from a fixed endowment and posit a learning rule which directs convergence to competitive equilibrium. In each period trade converges to an allocation in the contract set, where agents interpret the current (common) normalized utility gradient as a vector of prices to determine the implied wealth redistribution relative to their endowments. Agents who are less wealthy at the new allocation are designated subsidizers, and demand to provide smaller subsidies in subsequent periods of economic activity. Our model is a globally stable alternative to Walras' tatonnement.

Note: A previous version of this abstract can be found at: http://ssrn.com/abstract=671941.

Keywords: Learning, general equilibrium, stability, Scarf's example

JEL Classification: C63, C68, D44, D51, D58, D61

Suggested Citation

Crockett, Sean and Sunder, Shyam and Spear, Stephen E., Learning Competitive Equilibrium. Journal of Mathematical Economics, Vol. 44, pp. 651-671, 2008; Yale ICF Working Paper No. 08-17. Available at SSRN: https://ssrn.com/abstract=907390

Sean Crockett (Contact Author)

City University of New York, Baruch College - Zicklin School of Business - Department of Economics and Finance ( email )

Zicklin School of Business
55 Lexington Avenue
New York, NY 10010
United States

HOME PAGE: http://www.seanmcrockett.com

Shyam Sunder

Yale University - School of Management ( email )

165 Whitney Avenue
P.O. Box 208200
New Haven, CT 06520-8200
United States
203-432-6160 (Phone)

HOME PAGE: http://www.som.yale.edu/faculty/sunder/

Yale University - Cowles Foundation

Box 208281
New Haven, CT 06520-8281
United States

Stephen E. Spear

Carnegie Mellon University - Financial Economics ( email )

GSIA
Schenley Park
Pittsburgh, PA 15213
United States

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