Do prices coordinate markets?

DOI10.1145/2897518.2897559zbMATH Open1377.91096arXiv1511.00925OpenAlexW1915165977MaRDI QIDQ5361850FDOQ5361850

Authors: Justin Hsu, Jamie Morgenstern, Ryan Rogers, Aaron Roth, Rakesh V. Vohra 

Publication date: 29 September 2017

Published in: Proceedings of the forty-eighth annual ACM symposium on Theory of Computing (Search for Journal in Brave)

Abstract: Walrasian equilibrium prices can be said to coordinate markets: They support a welfare optimal allocation in which each buyer is buying bundle of goods that is individually most preferred. However, this clean story has two caveats. First, the prices alone are not sufficient to coordinate the market, and buyers may need to select among their most preferred bundles in a coordinated way to find a feasible allocation. Second, we don't in practice expect to encounter exact equilibrium prices tailored to the market, but instead only approximate prices, somehow encoding "distributional" information about the market. How well do prices work to coordinate markets when tie-breaking is not coordinated, and they encode only distributional information? We answer this question. First, we provide a genericity condition such that for buyers with Matroid Based Valuations, overdemand with respect to equilibrium prices is at most 1, independent of the supply of goods, even when tie-breaking is done in an uncoordinated fashion. Second, we provide learning-theoretic results that show that such prices are robust to changing the buyers in the market, so long as all buyers are sampled from the same (unknown) distribution.

Full work available at URL: https://arxiv.org/abs/1511.00925

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zbMATH Keywords

learning theoryWalrasian equilibrium

Mathematics Subject Classification ID

Microeconomic theory (price theory and economic markets) (91B24) Special types of economic equilibria (91B52) Rationality and learning in game theory (91A26)

Cited In (7)

• Do Prices Determine Vertical Integration?
• Pricing to Maximize Revenue and Welfare Simultaneously in Large Markets
• Computing Walrasian equilibria: fast algorithms and structural properties
• Title not available (Why is that?)
• Market Pricing for Matroid Rank Valuations
• A Dual Approach for Dynamic Pricing in Multidemand Markets
• When Are Welfare Guarantees Robust

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