Walrasian analysis via two-player games

We associate to any pure exchange economy a game with only two players, regardless of the number of consumers. In this twoplayer game, each player represents a different role of the society, formed by all the individuals in the economy. Player 1 selects feasible allocations trying to make Pareto improvements. Player 2 chooses an alternative from the wider range of allocations that are feasible in the sense of Aubin. The set of Nash equilibria of our game is non-empty and our main result provides a characterization of Walrasian equilibria allocations as strong Nash equilibria of the associated society game. © 2008 Elsevier Inc. All rights reserved. JEL classification: D49; D51; C70; C72