Decentralized trade, random utility and the evolution of social welfare

Oscar Volij (), Michihiro Kandori and Roberto Serrano

UC3M Working papers. Economics from Universidad Carlos III de Madrid. Departamento de Economía

Abstract: We study decentralized trade processes in general exchange economies and house allocation problems with and without money. The processes are subject to persistent random shocks stemming from agents' maximization of random utility. By imposing structure on the utility noise term -logit distribution-, one is able to calculate exactly the stationary distribution of the perturbed Markov process for any level of noise. We show that the stationary distribution places the largest probability on the maximizers of weighted sums of the agents' (intrinsic) utilities, and this probability tends to 1 as noise vanishes

Date: 2005-11
New Economics Papers: this item is included in nep-upt
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Related works:
Journal Article: Decentralized trade, random utility and the evolution of social welfare (2008)
Working Paper: Decentralized Trade, Random Utility and the Evolution of Social Welfare (2004)
Working Paper: Decentralized Trade, Random Utility and the Evolution of Social Welfare (2004)
Working Paper: Decentralized Trade, Random Utility and the Evolution of Social Welfare (2004)
Working Paper: Decentralized Trade, Random Utility and the Evolution of Social Welfare
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Persistent link: https://EconPapers.repec.org/RePEc:cte:werepe:we056433

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