Learning Competitive Equilibrium in Laboratory Exchange Economies

23 Pages Posted: 11 Sep 2006 Last revised: 20 Mar 2019

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Abstract

Crockett, Spear and Sunder [2006] propose a simple learning rule through which an informationally decentralized, repeated, static pure exchange economy populated by agents with standard neoclassical preferences will coordinate on a competitive equilibrium. In this paper a laboratory market is instituted to examine the hypothesis that people actually adopt this or similar rules. The adopted market institution strongly restricts the space of agent actions, facilitating the identification of decision rules. Evidence for learning competitive equilibrium is mixed due to strong heterogeneity in decision-making. Some subjects clearly forego immediate gains under the expectation that the market will move in a more favorable direction, and update their activity given changes in their expectations. However, a majority do not, and many are, in fact, simply content to satisfice, though means to at least attempt to do better was straightforward.

Keywords: Disequilibrium, learning, pure exchange, zero intelligence, experimental economics

JEL Classification: C91, C92, D50, D83

Suggested Citation

Crockett, Sean, Learning Competitive Equilibrium in Laboratory Exchange Economies. Economic Theory, Vol. 34(1), pp. 157-180, 2008, Available at SSRN: https://ssrn.com/abstract=929184

Sean Crockett (Contact Author)

Chapman University ( email )

Orange, CA 92866
United States

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