Markets as Economizers of Information: Field Experimental Examination of the "Hayek Hypothesis"

Omar Al-Ubaydli and Peter Boettke ()

No 1025, Working Papers from George Mason University, Interdisciplinary Center for Economic Science

Abstract: The work of Friedrich Von Hayek contains several testable predictions about the nature of market processes. Vernon Smith termed the most important one the "Hayek hypothesis:" equilibrium prices and the gains from trade can be achieved in the presence of diffuse, decentralized information, and in the absence of price-taking behavior and centralized market direction. Vernon Smith tested this by surveying data on laboratory experimental markets and found strong support. We repeat this exercise using field experimental market data. Using field experiments allows us to test several other predictions. Generally speaking, we find support for Hayek's theories.

Keywords: price dynamics; entrepreneurs; field experiment; market process (search for similar items in EconPapers)
JEL-codes: B53 C90 D40 D51 D61 D82 L26 (search for similar items in EconPapers)
Pages: 14
Date: 2011-05
New Economics Papers: this item is included in nep-ent, nep-exp and nep-hme
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Related works:
Working Paper: Markets as economizers of information: Field experimental examination of the 'hayek hypothesis' (2012)
Working Paper: Markets as economizers of information: Field experimental examination of the “Hayek Hypothesis” (2010)
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