A Necessary and
Sufficient Condition for Convergence of Statistical to Strategic
Equilibria of Market Games
Dimitrios P. Tsomocos
Said Business School & St. Edmund Hall , University of
Oxford and Financial Markets Group, LSE
Department of Economics, University of Athens and Council
of Economic Advisers, Hellenic Ministry of Economy & Finance
We analyze a market game where traders are heterogeneous
with respect to their rationality level and have asymmetric information.
The market mechanism results into a statistical equilibrium, where traders
randomise among their available actions due to their limited rationality.
We provide a necessary and sufficient condition for convergence of
statistical to strategic equilibria of market games, when traders become
more informed and increasingly more rational.
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