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Economic Theory Bulletin

, Volume 5, Issue 2, pp 127–137 | Cite as

Externalities in economies with endogenous sharing rules

  • Philippe BichEmail author
  • Rida Laraki
Research Article
  • 109 Downloads

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 

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Copyright information

© Society for the Advancement of Economic Theory 2017

Authors and Affiliations

  1. 1.Paris School of EconomicsCentre d’Economie de la Sorbonne UMR 8174, Université Paris I Panthéon/SorbonneParisFrance
  2. 2.CNRS, Université Paris-DauphinePSL Research University, LamsadeParisFrance
  3. 3.Department of EconomicsEcole PolytechniquePalaiseauFrance

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