Equilibrium, Equilibration, Information and Multiple Markets: From Basic Science to Institutional Design

Abstract

[Introduction] Prices exhibit subtle coordination features among multiple markets, reflecting opportunity costs and fostering specialization throughout the economy. Furthermore, it is widely believed that prices can adjust rapidly, and possibly almost immediately while carrying information about worldly events from insiders to non-insiders who can use it. By receiving the information contained in prices the otherwise uninformed can adjust to those events. Not only do prices appropriately reflect opportunity cost within properly supportive institutions, they carry all available, relevant information known throughout the economy.