exchange

Robert B. Wilson
From The New Palgrave Dictionary of Economics, Second Edition, 2008
Edited by Steven N. Durlauf and Lawrence E. Blume
Alternate versions available: 1987 Edition
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Abstract

Economic studies of exchange examine processes in which agents obtain gains from trade, e.g. bilateral bargaining and contracting, auctions, and multilateral markets. Prominent descriptive theories include idealized versions that assume agents simply respond to prices that clear markets. Realistic versions recognize effects of procedural rules and strategic behavior, and various impediments such as incomplete or unenforceable contracts, insufficient markets, imperfect information, and incomplete observability. Normative versions design market procedures, contract forms, and settlement rules that strengthen incentives and promote efficient outcomes.
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How to cite this article

Wilson, Robert B. "exchange." The New Palgrave Dictionary of Economics. Second Edition. Eds. Steven N. Durlauf and Lawrence E. Blume. Palgrave Macmillan, 2008. The New Palgrave Dictionary of Economics Online. Palgrave Macmillan. 14 December 2017 <http://www.dictionaryofeconomics.com/article?id=pde2008_E000146> doi:10.1057/9780230226203.0515

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