An Experimental Examination of the Walrasian Tatonnement Mechanism
Kevin McCabe (),
Stephen Rassenti and
RAND Journal of Economics, 1996, vol. 27, issue 4, pages 681-699
This is a systematic experimental comparison of the efficiency and competitive properties of a computerized multiunit tatonnement with or without a dynamic improvement rule, with or without publicity of order flow information. All versions of the tatonnement are comparatively less efficient than the continuous double auction. The tatonnement yields competitive prices, but both sides tend to underreveal demand/supply, causing inefficiency. Only the full-information, no-improvement-rule version of the tatonnement procedure approaches the efficiency of the double auction.
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Working Paper: An Experimental Examination of the Walrasian Tatonnement Mechanism (1992)
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