Walrasian auction

The Tâtonnement process [ tɑtɔnmɑ ] (Fr. " tentative attempt ", " Fumble " ) describes the interpretation of the market mechanism as an auction process according to Léon Walras.

It is assumed that there is an auctioneer, the Walrasian auctioneer (Invisible Hand ), the (initially arbitrary ) announces prices for goods and factors and the supplied and demanded by consumers and businesses at these prices levels are reported. Votes supply and demand do not match, the auctioneer changes the price until there is a market equilibrium.

Procedure of the auctioneer:

• Excess demand: increase the price
• Excess supply: lower my price

Through trial and error the auctioneer scans at the equilibrium price. Only then, for exchange.

Basic assumptions:

• Perfect competition
• Use -maximizing ( rational ) behavior of consumers
• It may only be traded for equilibrium prices.

The Tâtonnement process provides no real explanation of how the "invisible hand" of the market, if only because there is no ( central ) Auctioneer in reality.