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Inflation and Expectations in Experimental Markets

Daniels, Brian P. and Plott, Charles R. (1987) Inflation and Expectations in Experimental Markets. Social Science Working Paper, 634. California Institute of Technology , Pasadena, CA. (Unpublished) https://resolver.caltech.edu/CaltechAUTHORS:20170911-150800321

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Abstract

A total of nine experimental markets were studied. Seven of these involved eleven to twelve periods of inflation at a constant percentage and then two or three periods of no inflation. Two experiments involved no inflation for twelve periods and then inflation at a constant rate for three periods. In all but three markets, participants were asked to guess the mean price of the upcoming market period before they had any information about the parameters for that period. The subject with the best guess was given a financial reward in addition to any profit earned in the market. Convergence properties are compared. Rational expectations models are tested and the structure of forecasts are studied. In general the rational expectations models capture much of what is observed but paradoxes exist in the data and in the application of the models.


Item Type:Report or Paper (Discussion Paper)
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http://resolver.caltech.edu/CaltechAUTHORS:20140311-133427669Related ItemPublished Version
Additional Information:Revised. Original dated to May 1987. The financial support of the National Science Foundation and the Caltech Program of Enterprise and Public Policy is gratefully acknowledged. The authors also wish to thank David Grether, Kemal Guler, Jeffrey Dubin, Thomas Saving, and Edward Zanelli. Published as Daniels, Brian P., and Charles R. Plott. "Inflation and expectations in experimental markets." Bounded rational behavior in experimental games and markets. Springer, Berlin, Heidelberg, 1988. 198-218.
Group:Social Science Working Papers
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Caltech Program of Enterprise and Public PolicyUNSPECIFIED
Series Name:Social Science Working Paper
Issue or Number:634
Record Number:CaltechAUTHORS:20170911-150800321
Persistent URL:https://resolver.caltech.edu/CaltechAUTHORS:20170911-150800321
Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:81319
Collection:CaltechAUTHORS
Deposited By: Jacquelyn Bussone
Deposited On:11 Sep 2017 22:58
Last Modified:03 Oct 2019 18:41

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