Correlated Equilibria in Competitive Market Games

Gaël Giraud

Papiers d'Economie Mathématique et Applications from Université Panthéon-Sorbonne (Paris 1)

Abstract: We investigate properties of correlated equilibria in competitive, pure-exchange market games. We prove that: 1) the game defined in Schmeidler (1980) always admits the no-trade issue as mixed equilibrium outcome; 2) non-pure correlated equilibria may exist in every competitive strategic market game, and share very "bad" properties (indeterminacy and Pareto-inefficiency), calling for some way to purify them. We then interpret correlated equilibria as strategic sunspots resulting from a strategic incompleteness of markets, due to the fact that players are unable to insure themselves against strategies played by their opponents.

Keywords: GAMES (search for similar items in EconPapers)
JEL-codes: D41 D52 D81 (search for similar items in EconPapers)
Pages: 21 pages
Date: 1997
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Persistent link: https://EconPapers.repec.org/RePEc:fth:pariem:97.83

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