| Oscar Volij, Hebrew University of Jerusalem |
| The Evolution of Exchange |
| Session: C-13-5 Wednesday 16 August 2000 by Volij, Oscar |
| The aim of the paper is to introduce the modern techniques of evolutionary game theory introduced into economics by Young (1993) and others to analyze exchange economies. We define a dynamic matching process on the simple housing problem introduced by Shapley and Scarf (1974) and analyze the stochastic stability of its allocations. Our main findings are: 1. All the efficient allocations are stochastically stable. 2. In three-person economies, all the stochastically stable allocations are efficient. 3. An example of a four-agent economy where an inefficient allocation is stochastically stable. |
| Submitted paper full-text in .pdf |