tâtonnement process
E588136
The tâtonnement process is an economic adjustment mechanism, introduced by Léon Walras, in which prices are iteratively revised in response to excess demand or supply until a general equilibrium is reached without actual trades occurring out of equilibrium.
Statements (46)
| Predicate | Object |
|---|---|
| instanceOf |
economic adjustment mechanism
ⓘ
general equilibrium concept ⓘ price adjustment process ⓘ |
| appliesTo |
exchange economies
ⓘ
multi-market economies ⓘ production economies ⓘ |
| assumes | centralized price setting by an auctioneer ⓘ |
| assumption |
agents take prices as given
ⓘ
markets are cleared only at equilibrium prices ⓘ no trades occur out of equilibrium ⓘ |
| characteristic |
discrete or continuous price adjustments
ⓘ
dynamic adjustment path toward equilibrium ⓘ no quantity trading during adjustment ⓘ |
| conditionForConvergence |
gross substitutability of excess demand functions
ⓘ
stability of excess demand functions ⓘ |
| contrastedWith |
non-tâtonnement adjustment processes
ⓘ
quantity adjustment mechanisms ⓘ |
| coreIdea | prices are iteratively revised in response to excess demand or supply ⓘ |
| criticizedFor |
ignoring quantity rationing during adjustment
ⓘ
lack of realism about no trade out of equilibrium ⓘ potential instability or cycles in some economies ⓘ |
| equilibriumCondition | market demand equals market supply in all markets ⓘ |
| etymology | from French "tâtonner" meaning "to grope" or "to grope one’s way" ⓘ |
| field |
general equilibrium theory
ⓘ
microeconomics ⓘ |
| goal | reach general equilibrium ⓘ |
| historicalContext | developed in late 19th century ⓘ |
| idealizationOf | how competitive markets might adjust toward equilibrium ⓘ |
| influenced | modern dynamic general equilibrium models ⓘ |
| influencedBy | Léon Walras’s Elements of Pure Economics NERFINISHED ⓘ |
| introducedBy | Léon Walras NERFINISHED ⓘ |
| involves |
calculation of excess demand in each market
ⓘ
iterative price revision until excess demand is zero ⓘ |
| languageOfOrigin | French ⓘ |
| mathematicalFormulation |
difference equations for iterative price updates
ⓘ
differential equations for price dynamics ⓘ |
| mechanism | auctioneer adjusts prices based on excess demand ⓘ |
| relatedConcept |
Walrasian auctioneer
NERFINISHED
ⓘ
Walrasian equilibrium NERFINISHED ⓘ general competitive equilibrium ⓘ |
| relatedResult |
Arrow–Hurwicz stability analysis
NERFINISHED
ⓘ
Sonnenschein–Mantel–Debreu results on excess demand ⓘ |
| requiresInformation | knowledge of aggregate excess demand in each period ⓘ |
| teaches | conceptual separation between trading and price formation ⓘ |
| usedIn |
stability analysis of general equilibrium
ⓘ
theoretical analysis of market stability ⓘ |
Referenced by (1)
Full triples — surface form annotated when it differs from this entity's canonical label.
subject surface form:
Léon Walras