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Tâtonnement
A Walrasian auction, introduced by Léon Walras, is a type of simultaneous auction where each agent calculates its demand for the good at every possible price and submits this to an auctioneer. The price is then set so that the total demand across all agents equals the total amount of the good. Thus, a Walrasian auction perfectly matches the supply and the demand. Walras suggested that equilibrium would always be achieved through a process of tâtonnement (French for "groping"), a form of hill climbing. In the 1970s, however, the Sonnenschein–Mantel–Debreu theorem proved that such a process would not necessarily reach a unique and stable equilibrium, even if the market is populated with perfectly rational agents. Walrasian auctioneer The ''Walrasian auctioneer'' is the presumed auctioneer that matches supply and demand in a market of perfect competition. The auctioneer provides for the features of perfect competition: perfect information and no transaction costs. The process i ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
General Equilibrium Theory
In economics, general equilibrium theory attempts to explain the behavior of supply, demand, and prices in a whole economy with several or many interacting markets, by seeking to prove that the interaction of demand and supply will result in an overall general equilibrium. General equilibrium theory contrasts with the theory of ''partial'' equilibrium, which analyzes a specific part of an economy while its other factors are held constant. General equilibrium theory both studies economies using the model of equilibrium pricing and seeks to determine in which circumstances the assumptions of general equilibrium will hold. The theory dates to the 1870s, particularly the work of French economist Léon Walras in his pioneering 1874 work ''Elements of Pure Economics''. The theory reached its modern form with the work of Lionel W. McKenzie (Walrasian theory), Kenneth Arrow and Gérard Debreu (Hicksian theory) in the 1950s. Overview Broadly speaking, general equilibrium tries to give ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Sonnenschein–Mantel–Debreu Theorem
The Sonnenschein–Mantel–Debreu theorem is an important result in general equilibrium economics, proved by Gérard Debreu, , and Hugo F. Sonnenschein in the 1970s. It states that the excess demand curve for an exchange economy populated with utility-maximizing rational agents can take the shape of any function that is continuous, has homogeneity degree zero, and is in accordance with Walras's law. This implies that the excess demand function does not take a well-behaved form even if each agent has a well-behaved utility function. Market processes will not necessarily reach a unique and stable equilibrium point. More recently, Jordi Andreu, Pierre-André Chiappori, and Ivar Ekeland extended this result to market demand curves, both for individual commodities and for the aggregate demand of an economy as a whole. This means that demand curves may take on highly irregular shapes, even if all individual agents in the market are perfectly rational. In contrast with usual a ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Léon Walras
Marie-Esprit-Léon Walras (; 16 December 1834 – 5 January 1910) was a French mathematical economics, mathematical economist and Georgist. He formulated the Marginalism, marginal theory of value (independently of William Stanley Jevons and Carl Menger) and pioneered the development of general equilibrium theory. Walras is best known for his book ''Éléments d'économie politique pure'', a work that has contributed greatly to the mathematization of economics through the concept of general equilibrium. For Walras, exchanges only take place after a Walrasian ''tâtonnement'' (French for "trial and error"), guided by the auctioneer, has made it possible to reach market equilibrium. It was the general equilibrium obtained from a single hypothesis, rarity, that led Joseph Schumpeter to consider him "the greatest of all economists". The notion of general equilibrium was very quickly adopted by major economists such as Vilfredo Pareto, Knut Wicksell and Gustav Cassel. John Hicks and Pa ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Types Of Auction
An auction is usually a process of buying and selling goods or services by offering them up for bids, taking bids, and then selling the item to the highest bidder or buying the item from the lowest bidder. Some exceptions to this definition exist and are described in the section about different types. The branch of economic theory dealing with auction types and participants' behavior in auctions is called auction theory. The open ascending price auction is arguably the most common form of auction and has been used throughout history. Participants bid openly against one another, with each subsequent bid being higher than the previous bid. An auctioneer may announce prices, while bidders submit bids vocally or electronically. Auctions are applied for trade in diverse contexts. These contexts include antiques, paintings, rare collectibles, expensive wines, commodities, livestock, radio spectrum, used cars, real estate, online advertising, vacation packages, emission trading, an ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Auction
An auction is usually a process of Trade, buying and selling Good (economics), goods or Service (economics), services by offering them up for Bidding, bids, taking bids, and then selling the item to the highest bidder or buying the item from the lowest bidder. Some exceptions to this definition exist and are described in the section about different #Types, types. The branch of economic theory dealing with auction types and participants' behavior in auctions is called auction theory. The open ascending price auction is arguably the most common form of auction and has been used throughout history. Participants bid openly against one another, with each subsequent bid being higher than the previous bid. An auctioneer may announce prices, while bidders submit bids vocally or electronically. Auctions are applied for trade in diverse #Contexts, contexts. These contexts include antiques, Art auction, paintings, rare collectibles, expensive wine auction, wines, commodity, commodities, l ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Hill Climbing
numerical analysis, hill climbing is a mathematical optimization technique which belongs to the family of local search. It is an iterative algorithm that starts with an arbitrary solution to a problem, then attempts to find a better solution by making an incremental change to the solution. If the change produces a better solution, another incremental change is made to the new solution, and so on until no further improvements can be found. For example, hill climbing can be applied to the travelling salesman problem. It is easy to find an initial solution that visits all the cities but will likely be very poor compared to the optimal solution. The algorithm starts with such a solution and makes small improvements to it, such as switching the order in which two cities are visited. Eventually, a much shorter route is likely to be obtained. Hill climbing finds optimal solutions for convex problems – for other problems it will find only local optima (solutions that cannot ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Rational Choice Theory
Rational choice modeling refers to the use of decision theory (the theory of rational choice) as a set of guidelines to help understand economic and social behavior. The theory tries to approximate, predict, or mathematically model human behavior by analyzing the behavior of a rational actor facing the same costs and benefits.Gary Browning, Abigail Halcli, Frank Webster (2000). ''Understanding Contemporary Society: Theories of the Present'', London: Sage Publications. Rational choice models are most closely associated with economics, where mathematical analysis of behavior is standard. However, they are widely used throughout the social sciences, and are commonly applied to cognitive science, criminology, political science, and sociology. Overview The basic premise of rational choice theory is that the decisions made by individual actors will collectively produce aggregate social behaviour. The theory also assumes that individuals have preferences out of available choice ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Supply And Demand
In microeconomics, supply and demand is an economic model of price determination in a Market (economics), market. It postulates that, Ceteris_paribus#Applications, holding all else equal, the unit price for a particular Good (economics), good or other traded item in a perfect competition, perfectly competitive market, will vary until it settles at the market clearing, market-clearing price, where the quantity demanded equals the quantity supplied such that an economic equilibrium is achieved for price and quantity transacted. The concept of supply and demand forms the theoretical basis of modern economics. In situations where a firm has market power, its decision on how much output to bring to market influences the market price, in violation of perfect competition. There, a more complicated model should be used; for example, an oligopoly or product differentiation, differentiated-product model. Likewise, where a buyer has market power, models such as monopsony will be more a ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
Perfect Competition
In economics, specifically general equilibrium theory, a perfect market, also known as an atomistic market, is defined by several idealizing conditions, collectively called perfect competition, or atomistic competition. In Economic model, theoretical models where conditions of perfect competition hold, it has been demonstrated that a Market (economics), market will reach an Economic equilibrium, equilibrium in which the quantity supplied for every Goods and services, product or service, including Workforce, labor, equals the quantity demanded at the current price. This equilibrium would be a Pareto optimum. Perfect competition provides both allocative efficiency and productive efficiency: * Such markets are ''allocatively efficient'', as output will always occur where marginal cost is equal to average revenue i.e. price (MC = AR). In perfect competition, any Profit maximization, profit-maximizing producer faces a market price equal to its marginal cost (P = MC). This implies that ... [...More Info...] [...Related Items...] OR: [Wikipedia] [Google] [Baidu] |
