Back to fundamentals: Equilibrium in abstract economies

Michael Richter, Ariel Rubinstein

Research output: Contribution to journalArticlepeer-review

Abstract

We propose a new abstract definition of equilibrium in the spirit of competitive equilibrium: a profle of alternatives and a public ordering (expressing prestige, price, or a social norm) such that each agent prefers his assigned alternative to all lower-ranked ones. The equilibrium operates in an abstract setting built upon a concept of convexity borrowed from convex geometry. We apply the concept to a variety of convex economies and relate it to Pareto optimality. The "magic" of linear equilibrium prices is put into perspective by establishing an analogy between linear functions in the standard convexity and "primitive orderings" in the abstract convexity.

Original languageEnglish
Pages (from-to)2570-2594
Number of pages25
JournalAmerican Economic Review
Volume105
Issue number8
DOIs
StatePublished - 1 Aug 2015

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