This website uses cookies.

By clicking the "Accept" button or continuing to browse our site, you agree to first-party and session-only cookies being stored on your device to enhance site navigation and analyze site performance and traffic. For more information on our use of cookies, please see our Privacy Policy.

  1. Home
  2. Journals
  3. American Economic Review
  4. August 2015
  5. Back to Fundamentals: Equilibrium in Abstract Economies

Back to Fundamentals: Equilibrium in Abstract Economies

Download Full Text PDF

Abstract

We propose a new abstract definition of equilibrium in the spirit of competitive equilibrium: a profile of alternatives and a public ordering (expressing prestige, price, or a social norm) such that each agent prefers his assigned alternative to all lower-ranked ones. The equilibrium operates in an abstract setting built upon a concept of convexity borrowed from convex geometry. We apply the concept to a variety of convex economies and relate it to Pareto optimality. The "magic" of linear equilibrium prices is put into perspective by establishing an analogy between linear functions in the standard convexity and "primitive orderings" in the abstract convexity. (JEL C90, D11)

Citation

Richter, Michael, and Ariel Rubinstein. 2015. "Back to Fundamentals: Equilibrium in Abstract Economies." American Economic Review, 105 (8): 2570-94. DOI: 10.1257/aer.20140270

Additional Materials

JEL Classification

  • C90 General
  • D11 Consumer Economics: Theory