Social Equilibrium and Cycles on Compact Sets

Abstract

One proof of existence of general equilibrium assumes convexity and continuity of a preference correspondence on a compact convex feasible set W. Here we show the existence of a local equilibrium for a preference field which satisfies, not convexity, but the weaker local acyclicity. The theorem is then applied to a voting game, σ, without veto players. It is shown that if the dimension of the policy space is no greater than v(σ)-2, where v(σ) is the Nakumura number of the game, then no local cycles may occur and a local equilibrium must exist. With convex preferences then there will exist a choice of the game from W.

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