Decentralized evolutionary mechanisms for intertemporal economies: A possibility result |
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Authors: | Venkatesh Bala Mukul Majumdar Tapan Mitra |
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Affiliation: | (1) Present address: Department of Economics, Cornell University, Uris Hall, 14853-7601 Ithaca, New York, USA |
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Abstract: | We consider a stationary, infinite horizon aggregative model with one consumer and one producer living in each period. A decentralized intertemporal mechanism, satisfying the following evolutionary property, is constructed: if the current period's producer and consumer verify their equilibrium conditions, then the allocation is actually executed, without further verification by future agents. The mechanism is based on the idea of continual planning revision. It is shown that the outcome is an intertemporally efficient allocation which maximizes the long run average of one period utilities from consumption.We would like to thank L. Hurwicz, E. Malinvaud, and R. Radner for valuable discussions, and two referees for helpful comments. Research on this project was partially supported by a National Science Foundation Grant. |
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