Skip to main content

Markets and complexity

Resource type
Thesis type
(Project) M.A.
Date created
2008
Authors/Contributors
Abstract
This paper extends the model developed in “Complexity and Competition” (Gale and Sabourian, Econometrica 2005). In that paper, decentralized finite markets are treated as extensive-form matching and bargaining games. In these games there are many inefficient outcomes supported by subgame perfect equilibria. GS introduce an equilibrium refinement in which players maintain an aversion to complexity and show that such a refinement eliminates non-competitive outcomes. We admit more general environments and show that whether an aversion to complexity eliminates inefficient equilibria in this class of market games depends on supply and how valuations are distributed. There are many markets whose complexity averse equilibria preclude efficiency and there are many finite markets that have no simple subgame perfect equilibria. These results hold when the definition of complexity developed in GS is generalized to include a richer class of Markov partitions of the strategy space.
Document
Copyright statement
Copyright is held by the author.
Permissions
The author has not granted permission for the file to be printed nor for the text to be copied and pasted. If you would like a printable copy of this thesis, please contact summit-permissions@sfu.ca.
Scholarly level
Language
English
Member of collection
Download file Size
etd3463.pdf 1.39 MB

Views & downloads - as of June 2023

Views: 0
Downloads: 0