Market selection by boundedly-rational traders under constant returns to scale

Carlos Alós-Ferrer, Georg Kirchsteiger

Research output: Contribution to journalArticlepeer-review

Abstract

We consider a dynamic, stochastic model of trading-institution selection with boundedly-rational traders where sellers produce with constant unit costs. Traders will in general fail to coordinate exclusively on market-clearing institutions. Rather, any institution biasing the price upwards is stochastically stable.

Original languageEnglish (US)
Pages (from-to)51-53
Number of pages3
JournalEconomics Letters
Volume153
DOIs
StatePublished - Apr 1 2017

Keywords

  • Boundedly-rational traders
  • Stochastic stability
  • Trading institutions

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

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