Back to fundamentals: Equilibrium in abstract economies

Michael Richter, Ariel Rubinstein

    Research output: Contribution to journalArticle

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

    ASJC Scopus subject areas

    • Economics and Econometrics

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