Supporting Attainable Solutions: Symmetry and Complexity in One-Period Exchange Mechanisms
Supporting Attainable Solutions: Symmetry and Complexity in One-Period Exchange Mechanisms
In this chapter we compare economies at the least-structured level of dynamics: market systems characterized by one-shot clearing and hence a single timescale for strategic choices. We choose that timescale to coincide with the social “day” that is the natural cycle of production and consumption. We compare different clearing mechanisms according to a number of structural properties that can be used as a measure of complexity. We use a measure of allocative efficiency to illustrate distortions from competitive equilibrium for each mechanism. Much of the importance of process analysis can be illustrated with a single dilemma: the meaning and determination of the value of the numéraire for exchange. This is explored here. Six market models are presented to illustrate the constraints on rational action from asymmetry of the market mechanism or from strategically ambiguous degrees of freedom. The models have sufficiently many shared features that they roughly represent successive stages in the elaboration of a few common ideas. These are laid out in the chapter.
Keywords: Information, clearing rules, asymmetries, simultaneous moves
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