The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Market Competition and Selection

  • Lawrence Blume
  • David Easley
Reference work entry
DOI: https://doi.org/10.1057/978-1-349-95189-5_2028

Abstract

There is a long history in economics of using market selection arguments in defence of rationality hypotheses. According to these arguments, rational investors drive irrational investors out of asset markets and profit maximizing firms drive non-maximizing firms out of goods markets. In this article we present the history of these arguments and discuss the literature that examines whether these arguments for market selection, and its impact on efficiency, are correct.

Keywords

Rationality Market selection Kelly rule Incomplete markets 
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Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Lawrence Blume
    • 1
  • David Easley
    • 1
  1. 1.