Externalities in economies with endogenous sharing rules

Philippe Bich () and Rida Laraki
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Philippe Bich: Centre d’Economie de la Sorbonne UMR 8174, Université Paris I Panthéon/Sorbonne
Rida Laraki: PSL Research University, Lamsade

Economic Theory Bulletin, 2017, vol. 5, issue 2, No 1, 127-137

Abstract: Abstract Endogenous sharing rules were introduced by Simon and Zame (Econometrica 58(4):861–872, 1990) to model payoff indeterminacy in discontinuous games. They prove the existence in every compact strategic game of a mixed Nash equilibrium and an associated sharing rule. We extend their result to economies with externalities (Arrow and Debreu in Econometrica 22(3):265–290, 1954) where, by definition, players are restricted to pure strategies. We also provide a new interpretation of payoff indeterminacy in Simon and Zame’s model in terms of preference incompleteness.

Keywords: Abstract economies; Generalized games; Endogenous sharing rules; Walrasian equilibrium; Incomplete and discontinuous preferences; Better reply security (search for similar items in EconPapers)
JEL-codes: C02 C62 C72 D50 (search for similar items in EconPapers)
Date: 2017
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DOI: 10.1007/s40505-017-0118-3

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