General Equilibrium pp 98-107 | Cite as

# Conjectural Equilibria

## Abstract

In an economy with very many agents the market environment of any one of these is independent of the market actions he decides upon. More generally one can characterize an economy as *perfectly competitive* if the removal of any one agent from the economy would leave the remaining agents just as well off as they were before his removal. (The economy is said to satisfy a ‘no surplus’ condition; see Makowski, 1980; and Ostroy, 1980.) When an economy is not perfectly competitive, an agent in making a decision must take note of its effect on his market environment, for example, the price at which he can sell. This effect may not be known (or known with certainty) and will therefore be the subject of *conjecture*. A conjecture differs from expectations concerning future market environments which may, say, be generated by some stochastic process. It is concerned with responses to the actions of the agent.

### Keywords

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