Initial equipment

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An initial equipment (also basic equipment , in English specialist literature mostly initial endowment ) is in economics, especially in microeconomics , the initial state according to which the goods are distributed among the market participants before they are traded and / or processed. The initial configuration is an important parameter of many economical models. One of the questions in economics is to what extent initial equipment influences the result of the processes considered in the model, for example to what extent they are retained, differences are reduced or increased.

Example and demarcation

The initial equipment of actors is usually noted in vector form. Consider an actor A. Initially, for example in the context of modeling a pure barter economy, she may have two bottles of wine (good 1) and eight bars of chocolate (good 2). Her partner B, in turn, has four bottles of wine and a bar of chocolate. The initial equipment of the two actors can then be represented using equipment vectors and . Then one could consider that A and B can exchange goods with one another at will. Depending on their preferences, after the exchanges are complete, each actor will generally have a different combination of quantities of the two goods.

The initial configuration of an actor is to be distinguished from an (initial) allocation . Allocations always indicate the distribution of goods or resources of all actors (i.e. across the entire economy), while the initial equipment only affects the equipment of a specific actor. In the example outlined above, assuming a two-person economy, it could represent the initial allocation.

Significance in general equilibrium theory

The second law of welfare economics says that under certain theoretical conditions the Pareto-efficient state can be selected through a suitable redistribution of the initial equipment, which will then result in the market.

The initial equipment also played an important (negative) role in attempts to explain the creation of the general equilibrium through tâtonnement processes . These failed, among other things, because actions outside of an equilibrium in one round have an impact on the initial equipment of the next round, and thus change the general equilibrium that is to be approximated by the tâtonnement process or the voluntary consent of the agents maximizing the benefits, that would be worse off by changing the equipment. Léon Walras , the founder of the general theory of equilibrium, was therefore compelled to propose the sequence of his proposed process for establishing equilibrium in logical time and to exclude any out-of-equilibrium exchange.

Other areas

Individually rational agents can have an incentive to keep their initial equipment secret or to specify a wrong initial equipment and thus gain an advantage in processes that serve the reallocation of resources. In a general equilibrium model, for example, they are no longer pure price takers. How to avoid this is a matter of mechanism design theory .

See also

Endowment effect

Individual evidence

  1. Harald Wiese: Microeconomics. An introduction . 5th edition. Springer, Heidelberg 2010, p. 30 , ISBN 978-3-642-11599-8 .
  2. ^ Joachim Weimann : Economic Policy. Allocation and collective decision . 4th edition. Springer, Berlin 2006, ISBN 3-540-28856-2 , pp. 78 ( limited preview in Google Book search).
  3. James Heckman : Identifying the hand of past. Distinguishing state dependence from heterogeneity . In: The American Economic Review , Vol. 81 (1991), Issue 2, pp. 75-79, ISSN  0002-8282 .
  4. Pascal Bridel and Elisabeth Huck: Yet another look at Léon Walras's theory of tâtonnement . In: The European Journal of the History of Economic Thought . tape 9 , no. 4 , December 2002, ISSN  0967-2567 , p. 513-540 .
  5. ^ Franco Donzelli: Equilibrium and tatonnement in Walras's eléments . In: History of economic ideas . 2007, ISSN  1122-8792 , p. 85-138 ( unimi.it [PDF]).
  6. ^ Andrew Postlewaite: Manipulation via Endowments . In: The Review of Economic Studies . tape 46 , no. 2 , April 1979, ISSN  0034-6527 , pp. 255-262 .
  7. ^ Zvi Safra: Reallocations of Endowments . In: John Eatwell , Murray Milgate, Peter Newman (Eds.): The new Palgrave. A Dictionary of Economics, Vol. 3 . Macmillan, London 1987, ISBN 0-935859-10-1 .

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