Game-Theoretic Methods in General Equilibrium Analysis.

• Author: Wei, Jong-Shin

This volume contains seventeen articles (together with one introduction chapter and one addendum) written by a bona fide group of distinguished game-theorists whose names frequently appeared in leading "dry" journals such as Econometrica, Journal of Economic Theory, Review of Economic Studies, Journal of Mathematical Economics, International Journal of Game Theory, and Economic Theory. Given such an impressive list of contributors (among whom many are serving on the editorial boards of the aforementioned journals), the quality of papers is uniformly high, which might explain why the editorial introduction written by Mertens takes only three pages. This book presents a systematic (and obviously axiomatic!) exposition of the use of game-theoretic methods in general equilibrium analysis. Three quarters of the themes are confined to cooperative games; the use of non-cooperative approach is spread over topics including Shapley-Shubik mechanism, Cournot-Nash equilibrium, Bertrand-Edgeworth equilibrium, correlated equilibrium, communication equilibrium, and sunspot equilibrium. It mainly brings readers to the forefront of research fields from which most of us have shied away ever since we were pursuing doctoral degrees in economics.

Most articles are based on advanced lecture notes taken by students and consequently revised by authors presenting them during a workshop held at Long Island for a two-week period in 1991. They are technical survey papers (not published elsewhere) and rigorously written for those who are no strangers to concepts like Lebesgue measure and sigma-algebra. Since it is impossible, in light of the elegant link set forth by Mertens, to discuss all articles at equal length, I will simply follow my biased taste to report some comparisons made with two seemingly close substitutes on the market without getting into the technicality.

First, I am comparing this volume to Frontiers of Game Theory (edited by Ken Binmore, Alan Kirman and Piero Tani, MIT Press, 1993). Luckily enough topics in both volumes do not overlap. (Incidentally, if no chapter in either volume interests you, then you most likely will not find the game-theoretic approach interesting at all.) One common feature is that readers of both volumes might have to dig deep just to find out that the former is the proceedings of the NATO Advanced Study Institute on Game-Theoretic Methods in General Equilibrium Analysis, while the latter was produced by a game theory workshop...