Real indeterminancy of equilibria and manipulability

Marta Faias, Emma Moreno-García, Mário Rui Páscoa

Research output: Contribution to journalArticlepeer-review

5 Citations (Scopus)

Abstract

In this paper, we analyze the indeterminacy of equilibria in financial markets and propose a selection mechanism. We suggest that there is one equilibrium that prevails over the others, as a result of the market power of the agents that some states of nature become monopolists of certain commodities. Given a financial assets model, we define a price game and show the existence of mixed strategies equilibria. Then we purify these equilibria by considering a price game with incomplete information.

Original languageEnglish
Pages (from-to)325-340
Number of pages16
JournalJournal of Mathematical Economics
Volume37
Issue number4
Publication statusPublished - 2002

Keywords

  • Continuous random selection
  • Financial assets
  • Incomplete markets
  • Price game
  • Purification of equilibria

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