Non-Price Equilibria in Markets of Discrete Goods
Venue
EC (2011)
Publication Year
2011
Authors
Avinatan Hassidim, Haim Kaplan, Yishay Mansour, Noam Nisan
BibTeX
Abstract
We study markets of indivisible items in which price-based (Walrasian) equilibria
often do not exist due to the discrete non-convex setting. Instead we consider Nash
equilibria of the market viewed as a game, where players bid for items, and where
the highest bidder on an item wins it and pays his bid. We first observe that pure
Nash-equilibria of this game excatly correspond to price-based equilibiria (and
thus need not exist), but that mixed-Nash equilibria always do exist, and we
analyze their structure in several simple cases where no price-based equilibrium
exists. We also undertake an analysis of the welfare properties of these equilibria
showing that while pure equilibria are always perfectly efficient (“first welfare
theorem”), mixed equilibria need not be, and we provide upper and lower bounds on
their amount of inefficiency.
