Economic Analysis via Strategy Outcome Functions: A Survey of Recent Results

Abstract

The concept of a strategic outcome function is used for representing the institutions of trade or exchange in the economy. In this description every economic agent has access to a set of messages or strategies. Given a selection of strategies, one for each agent in the economy, the strategic outcome function assigns it an outcome. In the description of economic institutions of exchange an outcome is a list of net trades, one for every agent. Net trade is represented as a vector in Euclidean space whose dimension is equal to the number of commodities traded in the economy or in the institution described in the model. In order that a list of net trades will be an outcome it also has to satisfy the condition that summation of the net trades over agents yields zero in each coordinate. So, formally, a strategic outcome function maps selections of strategies to a subset of lists of net trades, i.e., outcomes.