Experimental Markets and Chamberlin's Excess Trading Conjecture

Ted Bergstrom ()

No 2004D, University of California at Santa Barbara, Economics Working Paper Series from Department of Economics, UC Santa Barbara

Abstract: Edward Chamberlin conjectured that the number of trades in realistic trading systems is likely to exceed that predicted by competitive equilibrium theory. He supported this conjecture by data from a large number of classroom experiments and with a plausible argument based on a numerical example. This paper states and proves a theorem that supports and illuminates Chamberlin's intuition, supplies examples of trading processes that lead to excess trading, and presents some additional experimental evidence.

Keywords: experimental economics; classroom experiments; excess trading; competitive equilibrium (search for similar items in EconPapers)
Date: 2004-07-05
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