An ABM-Evolutionary Approach: Bilateral Exchanges, Bargaining and Walrasian Equilibria
This paper analyzes, via intensive use of simulation techniques, the effects of the introduction of direct exchange relationships through bilateral trades in a simple general equilibrium pure exchange economy. Agents are heterogeneous in their endowments and repeatedly match in random pairs bargaining on how to split the advantages of a trade; possibly they can agree to exchange at the known market clearing prices. Simulations of this evolutionary process show that while walrasian outcomes emerge in the interaction among people with similar outside opportunities, people of different groups converge to accept an equilibrium in which agents with the best outside opportunity extract the greater part of the surplus out of an exchange. On other hand the acceptance of market mediation (i.e. walrasian outcomes) is more probable when either the parties try to exploit too much from the opponent or when there is anonymity in the trading process. The results show evidence that the acceptance of decentralized, personalized contracting (apart from efficiency considerations) increases the probability of amplifying the asymmetries in the initial distribution beyond what is produced by the pure market mechanism.
Key wordsBargaining Bilateral trades Social conventions Walrasian allocations Learning Numerical simulations
Unable to display preview. Download preview PDF.
- 1.Axtell R., Epstein J., and Young, P.H. (2000). The Emergence of Classes in a Multi-Agent Bargaining Model. Center on Social and Economic Dynamics. February 2000.Google Scholar
- 4.Glaeser E. and Scheinkman J. (2001). Measuring Social Interactions in Social Dynamics. D.C.: Brookings Institution Press; Cambridge and London: MIT Press. Ed. Durlauf S. and Young P.H.Google Scholar
- 5.Durlauf S. and Young P.H. (2001). Social Dynamics. Washington, D.C.: Brookings Institution Press; Cambridge and London: MIT Press.Google Scholar
- 6.Foley D. (1999). Statistical Equilibrium and Financial Arbitrage. Mimeo. Paper presented at the XII Workshop on General Equilibrium: Problems, Prospects and Alternatives. Siena.Google Scholar
- 8.Fudenberg D. and Levine D. (1998). Learning in Games. The MIT Press.Google Scholar
- 10.Kirman A.P. (1999) Aggregate Activity and Economic Organization. Mimeo. Paper presented at the XII Workshop on General Equilibrium: Problems, Prospects and Alternatives. Siena.Google Scholar
- 12.Young P.H. (1998). Individual Strategy and Social Structure. Pricenton University Press. Princeton, New Jersey.Google Scholar