General Equilibrium, Markets, Macroeconomics and Money in a Laboratory Experimental Environment
This paper reports on the use of laboratory experimental techniques to create relatively complete economic systems. The creation of these market systems reflects a first attempt to explore the nature of inherently interdependent environments, to assess the ability of simultaneous equations equilibrium models like the classical static general competitive equilibrium model, and to predict aspects of system behaviors. In addition, the impact of the quantity of a fiat money was studied. The economies were successfully created. Classical models capture much of what was observed.
Revised version. Original dated to March 1993. Funding of the research, supplied by the National Science Foundation, The Lynde and Harry Bradley Foundation, and the Caltech Laboratory for Experimental Economics and Political Science, is gratefully acknowledged. Peng Lian wishes to acknowledge the support of the Harvard/MIT Research Training Group in Political Economy. Participants at several lectures and workshops have made useful comments. These include UCLA (Jacob Marshak lecture 1990) and USC (1990). We wish to add a special acknowledgment to the referees who extended themselves far beyond what might be expected, and provided many suggestions that substantially changed the paper. Published in Lian, Peng, and Charles R. Plott. "General equilibrium, markets, macroeconomics and money in a laboratory experimental environment." Economic Theory 12, no. 1 (1998): 123-146.
Submitted - sswp842_-_revised.pdf