Tâtonnement and Recontracting

In the current theory of general economic equilibrium, recontracting and tâtonnement (a French word meaning ‘groping’) are used interchangeably to denote a simplifying assumption that no actual transactions, and therefore no production and consumption activities, take place at disequilibria when prices are changed according to the law of supply and demand (Kaldor, 1934; Arrow and Hahn, 1971, pp. 264, 282). Historically speaking, however, this usage is somewhat confusing, since recontracting is originally due to Edgeworth who developed it in a direction different from that in which Walras developed his tâtonnement (Walker, 1973).