Correlated Equilibria in Competitive Market Games

We investigate properties of correlated equilibria in competitive, pure-exchange market games. We prove that: 1) the game defined in Schmeidler (1980) always admits the no-trade issue as mixed equilibrium outcome; 2) non-pure correlated equilibria may exist in every competitive strategic market game, and share very "bad" properties (indeterminacy and Pareto-inefficiency), calling for some way to purify them. We then interpret correlated equilibria as strategic sunspots resulting from a strategic incompleteness of markets, due to the fact that players are unable to insure themselves against strategies played by their opponents.