An Experimental Investigation of Price Dispersion and Cycles

Timothy Cason, Daniel Friedman and Ed Hopkins

Journal of Political Economy, 2021, vol. 129, issue 3, 789 - 841

Abstract: We report a continuous-time experiment studying the Burdett-Judd model, whose unique Nash equilibrium (NE) features dispersed prices. Adaptive dynamics predict that the NE is stable for one of our parameter sets and unstable for another. The empirical price distribution is close to the NE distribution for the stable parameter set, but for the unstable parameter set it skews toward higher prices in its NE support interval. We offer an empirical definition of price cycles in terms of changes over time in robust measures of central tendency and dispersion, by which the data exhibit persistent cycles in both treatments but larger cycles for the unstable parameters. Results are roughly similar for professional and student sellers and for limited-information treatments.

Date: 2021
References: Add references at CitEc
Citations: View citations in EconPapers (6)

Downloads: (external link)
http://dx.doi.org/10.1086/712445 (application/pdf)
http://dx.doi.org/10.1086/712445 (text/html)
Access to the online full text or PDF requires a subscription.

Related works:
Working Paper: An Experimental Investigation of Price Dispersion and Cycles (2020)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ucp:jpolec:doi:10.1086/712445

Access Statistics for this article

More articles in Journal of Political Economy from University of Chicago Press
Bibliographic data for series maintained by Journals Division ().