Much of the recent theoretical computational work on market equilibrium uses the, so called, Fisher Model (see chapters 5 and 6 of the AGT book or talks and papers on Vijay Vazirani’s home page.) The model is somewhat simpler than Arrow-Debreu markets in that one party, the seller, brings into the market all goods except for money, which is the only thing that the others bring. This seemingly small variation seems to make handling it more tractable. In his ALGO invited talk, Vijay opined that Irving Fisher, the model’s father, is somewhat forgotten today probably due to his famous words just days before the stock market crash of 1929: “Stock prices have reached what looks like a permanently high plateau.” Vijay pointed out that Fisher’s comments just a little later are captured on youtube:
Hasanhodzic, Lo and Viola have some interesting ideas about performing an analysis of the dynamic consequences of even simpler markets (see:”A Computational View of Market Efficiency” http://arxiv.org/abs/0908.4580 ). And I have been playing around with the idea of even simpler market models (see: http://www.win-vector.com/blog/2009/09/a-discrete-model-gauging-market-efficiency/#Hasanhodzic:2009p2605 ). Obviously the extra simplicity lowers the relevance of the results a bit, but it is a direction that may interest readers of “Algorithmic Game Theory.”
How Did Economists Get It So Wrong?
By PAUL KRUGMAN
http://www.nytimes.com/2009/09/06/magazine/06Economic-t.html
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