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Manipulation of the Walrasian mechanism in production economies with unbounded short-selling. (English) Zbl 1132.91549

Summary: L. Hurwicz [“On the interaction between information and incentives”, in: K. Krippendorff (ed.), Communication and Control in Society, New York: Gordon & Breach (1979)] and Y. Otani and J. Sicilian [J. Econ. Theory 27, 47–68 (1982; Zbl 0506.90012), J. Econ. Theory 51, No. 2, 295–312 (1990; Zbl 0705.90008)] characterized the Nash equilibrium allocations of the Walrasian demand manipulation game in successively more general exchange environments. In this paper, I extend the analysis to production economies with short-selling. First, I generalize Hurwicz’s and Otani and Sicilian’s theorem that any allocation at which each agent’s consumption bundle lies above her true offer curve can be supported in Nash equilibrium. I then show that for finite economies of any size the set of such allocations is often topologically large.

MSC:

91B54 Special types of economic markets (including Cournot, Bertrand)
91A80 Applications of game theory
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