Working Paper: CEPR ID: DP5795
Authors: Carlos Alosferrer; Georg Kirchsteiger
Abstract: We consider a pure exchange economy, where for each good several trading institutions are available, only one of which is market-clearing. The other feasible trading institutions lead to rationing. To learn on which trading institutions to coordinate, traders follow behavioural rules of thumb that are based on the past performances of the trading institutions. Given the choice of institutions, market outcomes are determined by an equilibrium concept that allows for rationing. We find that full coordination on the market-clearing institutions without any rationing is a stochastically stable outcome, independently of the characteristics of the alternative available institutions. We also find, though, that coordination on other, non-market-clearing institutions with rationing can be stochastically stable.
Keywords: Evolution of Trading Platforms; General Equilibrium; Learning; Market Institutions; Rationing
JEL Codes: C72; C83; D4; D5; L1
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| performance of institutions (O43) | traders' institutional choices (D47) |
| trader behavior (G41) | emergence of market-clearing institutions (D47) |
| trader behavior (G41) | coordination on non-market clearing institutions with rationing (D45) |