In June 1993, a remarkable birthday party took place at CORE (Center for Operations Research and Econometrics) of the Université Catholique de Louvain in Louvain-la-neuve, Belgium. The gathering celebrated the fortieth anniversary of one of the great achievements of modern economic theory: the mathematical theory of general economic equilibrium. For several days and nights, hundreds of professors, researchers, and students from around the world presented papers, discussions, and reminiscences of the specialty they had pursued for years. At the center of the celebration were the modern founders of the field: Professors Kenneth Arrow (Nobel laureate), Gerard Debreu (Nobel laureate), and Lionel McKenzie.
This book presents the cause of that celebration, the field of mathematical general equilibrium theory. The approach of the field is revolutionary: It fundamentally changes your way of thinking. Once you see things this way, it is hard to conceive of them otherwise.
This book reflects the experience of students at Yale University, University of California at Davis, University of California at San Diego, and the Economics Training Center of the People's University of China (Renda) in Beijing. They deserve my thanks for their patience, the stimulus they provided for this book, and their contributions to it. A number of students and colleagues have reviewed portions of the manuscript. I owe thanks to Manfred Nermuth for critical advice and to Nelson Altamirano, Elena Bisagni, Peter Reinhard Hansen, Dong Heon Kim, Bernhard Lamel, Martin Meurers, Elena Pesavento, and Heather Rose who helped by catching typographical and technical errors.