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Updated: Jun 16, 2026

Measuring Delay Discounting in Humans Using an Adjusting Amount Task
07:47

Measuring Delay Discounting in Humans Using an Adjusting Amount Task

Published on: January 9, 2016

An impossibility theorem for price-adjustment mechanisms.

Christos H Papadimitriou1, Mihalis Yannakakis

  • 1Department of Electrical Engineering and Computer Science, University of California, Berkeley, CA 94720, USA. christos@cs.berkeley.edu

Proceedings of the National Academy of Sciences of the United States of America
|February 6, 2010
PubMed
Summary

No pricing strategy can efficiently reach market equilibrium. Discrete-time price adjustments fail to guarantee that excess demands are a small fraction of total supply within a polynomial time frame, even in simplified markets.

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Last Updated: Jun 16, 2026

Measuring Delay Discounting in Humans Using an Adjusting Amount Task
07:47

Measuring Delay Discounting in Humans Using an Adjusting Amount Task

Published on: January 9, 2016

Area of Science:

  • Economics
  • Computational Economics
  • Market Dynamics

Background:

  • Market equilibrium is a fundamental concept in economics.
  • Discrete-time price adjustment mechanisms are commonly used to model price setting.
  • Achieving efficient market equilibrium is crucial for economic stability.

Purpose of the Study:

  • To investigate the theoretical limitations of discrete-time price adjustment mechanisms.
  • To determine if any such mechanism can efficiently achieve market equilibrium.
  • To analyze the convergence time of price adjustment mechanisms to equilibrium.

Main Methods:

  • Theoretical analysis of price adjustment mechanisms.
  • Examination of market models with strictly concave utilities and differentiable excess demand functions.
  • Proof of non-existence of efficient discrete-time mechanisms.
  • Analysis of convergence rates to epsilon-close equilibrium.

Main Results:

  • No discrete-time price adjustment mechanism can ensure excess demands are within an epsilon fraction of total supply in polynomial time for any market.
  • This limitation persists even for differentiable excess demand functions.
  • For markets with a unique equilibrium, no function of epsilon bounds the periods needed to reach an epsilon-close equilibrium.

Conclusions:

  • Discrete-time price adjustment mechanisms are fundamentally limited in their ability to efficiently achieve market equilibrium.
  • The convergence to equilibrium can be arbitrarily slow, even in simple market structures.
  • Theoretical bounds on convergence time are non-existent for practical epsilon values.