  Central results in economics guarantee the existence of efficient equilibria
for various classes of markets. An underlying assumption in early work is that
agents are price-takers, i.e., agents honestly report their true demand in
response to prices. A line of research in economics, initiated by Hurwicz
(1972), is devoted to understanding how such markets perform when agents are
strategic about their demands. This is captured by the \emph{Walrasian
Mechanism} that proceeds by collecting reported demands, finding clearing
prices in the \emph{reported} market via an ascending price t\^{a}tonnement
procedure, and returns the resulting allocation. Similar mechanisms are used,
for example, in the daily opening of the New York Stock Exchange and the call
market for copper and gold in London.
  In practice, it is commonly observed that agents in such markets reduce their
demand leading to behaviors resembling bargaining and to inefficient outcomes.
We ask how inefficient the equilibria can be. Our main result is that the
welfare of every pure Nash equilibrium of the Walrasian mechanism is at least
one quarter of the optimal welfare, when players have gross substitute
valuations and do not overbid. Previous analysis of the Walrasian mechanism
have resorted to large market assumptions to show convergence to efficiency in
the limit. Our result shows that approximate efficiency is guaranteed
regardless of the size of the market.
