CaltechAUTHORS
  A Caltech Library Service

Extreme Walrasian Dynamics: The Gale Example in the Lab

Crockett, Sean and Oprea, Ryan and Plott, Charles (2011) Extreme Walrasian Dynamics: The Gale Example in the Lab. American Economic Review, 101 (7). pp. 3196-3220. ISSN 0002-8282. https://resolver.caltech.edu/CaltechAUTHORS:20140521-075804142

[img]
Preview
PDF - Published Version
See Usage Policy.

6Mb

Use this Persistent URL to link to this item: https://resolver.caltech.edu/CaltechAUTHORS:20140521-075804142

Abstract

We study David Gale's (1963) economy using laboratory markets. Tatonnement theory predicts prices will diverge from an equitable interior equilibrium toward infinity or zero depending only on initial prices. The inequitable equilibria determined by these dynamics give all gains from exchange to one side of the market. We show surprisingly strong support for these predictions. In most sessions one side of the market eventually outgains the other by more than 20 times, leaving the disadvantaged side to trade for mere pennies. We also find preliminary evidence that these dynamics are sticky, resisting exogenous interventions designed to reverse their trajectories.


Item Type:Article
Related URLs:
URLURL TypeDescription
http://dx.doi.org/10.1257/aer.101.7.3196DOIArticle
http://www.aeaweb.org/articles.php?doi=10.1257/aer.101.7.3196PublisherArticle
http://resolver.caltech.edu/CaltechAUTHORS:20100928-153906850Related ItemSSWP 1329
Additional Information:© 2011 American Economic Association. We thank three anonymous referees, Omar Al-Ubaydli, Dan Friedman, Stephen Spear, Steve Gjerstad, Bart Wilson, seminar participants at Baruch College, participants at the 2009 Economic Science Association North American Regional Meeting, and participants at the ninth Society for the Advancement of Economic Theory Conference. We also thank Paul J. Brewer, Hsing Yang Lee, and Travis Maron for developing the laboratory market system we used to conduct our experiment (see http:// marketscape,caltech.edu/wiki for details). For financial support, Crockett thanks the City University of New York through PSC-CUNY award 60095-3738. Plott thanks The Gordon and Betty Moore Foundation and the Caltech Laboratory for Experimental Economics and Political Science. Formerly SSWP 1329.
Funders:
Funding AgencyGrant Number
PSC-CUNY60095-3738
Gordon and Betty Moore FoundationUNSPECIFIED
Caltech Laboratory for Experimental Economics and Political ScienceUNSPECIFIED
Issue or Number:7
Classification Code:JEL Classifications: C92; D50
Record Number:CaltechAUTHORS:20140521-075804142
Persistent URL:https://resolver.caltech.edu/CaltechAUTHORS:20140521-075804142
Official Citation:Crockett, Sean, Ryan Oprea, and Charles Plott. 2011. "Extreme Walrasian Dynamics: The Gale Example in the Lab." American Economic Review, 101(7): 3196-3220.
Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:45859
Collection:CaltechAUTHORS
Deposited By: Ruth Sustaita
Deposited On:28 May 2014 21:48
Last Modified:03 Oct 2019 06:37

Repository Staff Only: item control page