An Experimental Examination of the Walrasian Tatonnement Mechanism

Corinne Bronfman, Kevin McCabe, David Porter, Stephen Rassenti and Vernon Smith ()

RAND Journal of Economics, 1996, vol. 27, issue 4, 681-699

Abstract: 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.

Date: 1996
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Working Paper: An Experimental Examination of the Walrasian Tatonnement Mechanism (1992)
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