# Externalities in economies with endogenous sharing rules

Research Article

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## Abstract

Endogenous sharing rules were introduced by Simon and Zame (Econometrica 58(4):861–872, 1990) to model payoff indeterminacy in discontinuous games. They prove the existence in every compact strategic game of a mixed Nash equilibrium and an associated sharing rule. We extend their result to economies with externalities (Arrow and Debreu in Econometrica 22(3):265–290, 1954) where, by definition, players are restricted to pure strategies. We also provide a new interpretation of payoff indeterminacy in Simon and Zame’s model in terms of preference incompleteness.

## Keywords

Abstract economies Generalized games Endogenous sharing rules Walrasian equilibrium Incomplete and discontinuous preferences Better reply security## JEL Classification

C02 C62 C72 D50## References

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