Extracting Valuable Data from Classroom Trading Pits

Ted Bergstrom ()

Experimental from University Library of Munich, Germany

Abstract: Edward Chamberlin, who initiated classroom market experiments, used the results of these experiments to argue that competitive equilibrium performs poorly in explaining the outcomes of real markets. Vernon Smith altered the design of Chamberlin's experiment to increase the amount of price information available to traders and in classroom experiments with this design found that trading outcomes were close to those predicted by competitive theory. This paper examines results of classroom trading experiments using the design found in Experiments with Economic Principles, an introductory economics text by Ted Bergstrom and John Miller. The procedure in this experiment is intermediate between that of Chamberlin and that of Smith. We have collected data on transaction prices and quantities from a large number of classroom experiments using this design. We compare the experimental outcomes with the predictions made by competitive equilibriumtheory and by a simple profit-splitting theory. Evidence suggests that neither theory is entirely successful, though in the first rounds of trading there seems to be a significant amount of profit-splitting and as traders become more experienced, outcomes are closer to those predicted by competitive theory.

Keywords: experimental economics; classroom experiments; Edward Chamberlin; Vernon Smith; trading pits; demand and supply; profit- splitting; random matching; excess trading (search for similar items in EconPapers)
JEL-codes: C9 (search for similar items in EconPapers)
Pages: 18 pages
Date: 2004-07-06
New Economics Papers: this item is included in nep-evo and nep-exp
Note: Type of Document - pdf; pages: 18
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://econwpa.ub.uni-muenchen.de/econ-wp/exp/papers/0407/0407002.pdf (application/pdf)

Related works:
Journal Article: Extracting Valuable Data from Classroom Trading Pits (2005)
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:wpa:wuwpex:0407002

Access Statistics for this paper

More papers in Experimental from University Library of Munich, Germany
Bibliographic data for series maintained by EconWPA ( this e-mail address is bad, please contact ).