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Global Instability in Experimental General Equilibrium: The Scarf Example

Anderson, Christopher M. and Granat, Sander and Plott, Charles R. and Shimomura, Ken-Ichi (2000) Global Instability in Experimental General Equilibrium: The Scarf Example. Social Science Working Paper, 1086. California Institute of Technology , Pasadena, CA. (Unpublished) https://resolver.caltech.edu/CaltechAUTHORS:20170808-153221745

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Abstract

Scarf (1960) proposed a market environment and a model of dynamic adjustment in which the standard tatonnement price adjustment process orbits around, rather than converges to, the competitive equilibrium. Hirota (1981) characterized the price paths by the configuration of endowments. We explore the predictions of Scarf's model in a nontatonnement experimental double auction. We find that the average transaction prices in each period do follow the path predicted by the Scarf and Hirota models. When the model predicts prices will converge to the competitive equilibrium, our data converge; when the model predicts prices will orbit our data orbit the equilibrium, and in the direction predicted by the model. Moreover, we observe a weak tendency for prices within a period to follow the path predicted by the model.


Item Type:Report or Paper (Working Paper)
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http://resolver.caltech.edu/CaltechAUTHORS:20140220-140231241Related ItemPublished Version
Additional Information:The financial support of the National Science Foundation and the Caltech Laboratory for Experimental Economics and Political Science is gratefully acknowledged. Mason Porter and Daniel Song contributed to the early stages of the research. Helpful comments were received from Mahmoud El-Gamal, Dave Grether and Daniel Rowe and from audiences in Hong Kong, Osaka, Otaru, and the Caltech-UCLA Freeway Conference on Experimental Economics. Mason Porter and Daniel Song contributed to the project during the early stages of the research. Published as Anderson, C.M., Plott, C.R., Shimomura, K.I., & Granat, S. (2004). Global instability in experimental general equilibrium: the Scarf example. Journal of Economic Theory, 115(2), 1-7.
Group:Social Science Working Papers
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NSFUNSPECIFIED
Caltech Laboratory for Experimental Economics and Political ScienceUNSPECIFIED
Subject Keywords:General equilibrium; Stability; Experiments
Series Name:Social Science Working Paper
Issue or Number:1086
Classification Code:JEL: D50; C92; E3
Record Number:CaltechAUTHORS:20170808-153221745
Persistent URL:https://resolver.caltech.edu/CaltechAUTHORS:20170808-153221745
Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:79970
Collection:CaltechAUTHORS
Deposited By: Jacquelyn Bussone
Deposited On:09 Aug 2017 18:07
Last Modified:03 Oct 2019 18:26

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