Optimization and Economic Equilibrium

Dr. Tyrrell Rockafellar will provide a joint seminar hosted by Math and the ISE Department and organized by the CAO at 4:05pm in LIT 225 on Oct 12. Looking forward to seeing you there!


Title: Optimization and Economic Equilibrium

Abstract: In the standard theory of economic equilibrium, various “agents” optimize what they want to buy and sell in order to adjust their holdings on the basis of given prices and associated budget constraints. Their decisions depend on preference relations that are representable nonuniquely by utility functions on the space of goods vectors. The standard question posed by economists is whether prices exist under which the resulting total demands of the agents are matched by total supplies. Equilibrium is a state in which, at the given prices, no agent wants to buy or sell anything. But the treatment of equilibrium in the literature is far from satisfactory, in particular in failing to offer a convincing economic mechanism by which equilibrium could be achieved and how it might respond to perturbations. This talk will explain new developments that approach the topic in different way that takes advantage of simple features of convex optimization and better knowledge of utility functions.

Short Bio: Dr. Tyrrell Rockafellar is professor emeritus at the departments of mathematics and applied mathematics at the University of Washington, Seattle. He is one of the leading scholars in optimization theory and related fields of analysis and combinatorics. He is the author of four major books including the landmark text “Convex Analysis” (1970), which has been cited more than 27,000 times according to Google Scholar and remains the standard reference on the subject, and “Variational Analysis” (1998, with Roger J-B Wets) for which the authors received the Frederick W. Lanchester Prize from the Institute for Operations Research and the Management Sciences (INFORMS).