Abstract
We study decentralized trade processes in general exchange economies and house allocation problems with and without money. The processes are affected by persistent random shocks stemming from agents' maximization of random utility. By imposing structure on the utility noise term-logit distribution-one is able to calculate exactly the stationary distribution of the perturbed Markov process for any level of noise. We show that the stationary distribution places the largest probability on the maximizers of weighted sums of the agents' (intrinsic) utilities, and this probability tends to 1 as noise vanishes.
| Original language | English |
|---|---|
| Pages (from-to) | 328-338 |
| Number of pages | 11 |
| Journal | Journal of Economic Theory |
| Volume | 140 |
| Issue number | 1 |
| DOIs | |
| State | Published - 1 May 2008 |
UN SDGs
This output contributes to the following UN Sustainable Development Goals (SDGs)
-
SDG 11 Sustainable Cities and Communities
Keywords
- Decentralized trade
- Exchange economies
- Housing markets
- Logit model
- Long-run stochastic stability
- Social welfare functions
ASJC Scopus subject areas
- Economics and Econometrics
Fingerprint
Dive into the research topics of 'Decentralized trade, random utility and the evolution of social welfare'. Together they form a unique fingerprint.Cite this
- APA
- Author
- BIBTEX
- Harvard
- Standard
- RIS
- Vancouver