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The Stability of Walrasian General Equilibrium under a Replicator Dynamic Herbert Gintis and Antoine Mandel∗† February 10, 2014 Abstract We prove the stability of equilibrium in a completely decentralized Walrasian general equilibrium economy in which prices are fully controlled by eco- nomic agents, with production and trade occurring out of equilibrium. Journal of Economic Literature Classifications: C62—Existence and Stability Conditions of Equilibrium D51—Exchange and Production Economies D58—Computable and Other Applied General Equilibrium Economies 1 Introduction Walras (1874) developed a general model of competitive market exchange, but provided only an informal argument for the existence of a market-clearing equi- librium for this model. Wald (1951) provided a proof of existence for a simplified version of Walras’ model, and this proof was substantially generalized by Debreu (1952), Arrow and Debreu (1954), Gale (1955), Nikaido (1956), McKenzie (1959), Negishi (1960), and others. Walras was well aware that his arguments had to backed by a theory of price adjustment that would ensure stability of equilibrium. He considered the key force leading to equilibrium to be face-to-face competition, which he thought should result in the continual updating of prices by economic agents until equilibrium ∗The authors contributed equally to this research. Gintis: Santa Fe Institute and Central European University; Mandel: Paris School of Economics, University of Paris 1 Panth´eon-Sorbonne. The authors acknowledge the support of Institute for New Economic Thinking grant INO1200022. †Corresponding author, email:antoine.mandel@univ-paris 1.fr, tel/fax:+3314407 8271/8301 1 emer