EconPapers    
Economics at your fingertips  
 

Minimally complex exchange mechanisms: Emergence of prices, markets, and money

Pradeep Dubey, Siddhartha Sahi and Martin Shubik

Department of Economics Working Papers from Stony Brook University, Department of Economics

Abstract: We consider abstract exchange mechanisms wherein individuals submit ``diversified" offers in m commodities, which are then redistributed to them. Our first result is that if the mechanism satisfies certain natural conditions embodying ``fairness" and ``convenience" then it admits unique prices, in the sense of consistent exchange-rates across commodity pairs ij that equalize the valuation of offers and returns for each individual. We next define integers which represent the ``time" required to exchange i for j, the ``difficulty" in determining the exchange ratio, and the ``dimension" of the offer space in i; and refer to these as time- , price and message- complexity of the mechanism. Our second result is that there are only a finite number of minimally complex mechanisms, which moreover correspond to certain directed graphs G in a precise sense. The edges of G can be regarded as markets for commodity pairs, and prices play a stronger role in that the return to a trader depends only on his own offer and the prices.

Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2) Track citations by RSS feed

Downloads: (external link)
http://www.sunysb.edu/economics/research/papers/2014/SB-revisedWP.pdf (application/pdf)

Related works:
Working Paper: Minimally Complex Exchange Mechanisms: Emergence of Prices, Markets, and Money (2014) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nys:sunysb:14-01

Access Statistics for this paper

More papers in Department of Economics Working Papers from Stony Brook University, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by ().

 
Page updated 2019-11-20
Handle: RePEc:nys:sunysb:14-01