Reference Work Entry

Encyclopedia of Complexity and Systems Science

pp 5359-5377

Market Games and Clubs

  • Myrna WoodersAffiliated withDepartment of Economics, Vanderbilt University

Definition of the Subject

The equivalence of markets and games concerns the relationship between two sorts of structures that appear fundamentally different –markets and games. Shapley and Shubik [60] demonstrates that: (1) games derived from markets withconcave utility functions generate totally balanced games where the players in the game are the participants in the economy and (2) every totally balancedgame generates a market with concave utility functions. A particular form of such a market is one where the commodities are theparticipants themselves, a labor market for example.

But markets are very special structures, more so when it is required that utility functions be concave. Participants may also get utility frombelonging to groups, such as marriages, or clubs, or productive coalitions. It may be that participants in an economy even derive utility (or disutility)from engaging in processes that lead to the eventual exchange of commodities. The question is when are such economic s ...

This is an excerpt from the content