Economics without prices and without games

Department of Decision Sciences and Managerial Economics

In many economic situations, neither prices nor authority rules. Rather, individual behavior is governed by social norms that specify what is allowed (socially acceptable) and what is forbidden (socially unacceptable). These norms can emerge in a decentralized way and can serve as a method to bring order to economic situations. The key component of our solution concept is a uniform permissible set which plays a role parallel to that of a price system in competitive equilibrium. The concept is analysed and applied to a variety of economic and social settings.