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Decentralization of the Core through Nash Equilibrium

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Working paper
Leonidas C. Koutsougeras and Nicholas Ziros
Issue number: 
Interuniversity Poles of Attraction
We show that in large finite economies, core allocations can be approximately decentralized as Nash (rather than Walras) equilibrium. We argue that this exercise is an essential complement to asymptotic core equivalence results, because it implies that in some approximate sense individual attempts to manipulate the decentralizing prices cannot be beneficial, which fits precisely the interpretation of asymptotic core convergence, namely the emergence of price taking.
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