Double Auction Dynamics: Structural Effects Of Non-Binding Price Controls

Dhananjay (Dan) K. Gode () and Shyam Sunder
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Dhananjay (Dan) K. Gode: New York University Stern School of Business

Yale School of Management Working Papers from Yale School of Management

Abstract: In competitive equilibrium, non-binding price controls (that is, price floors below and ceilings above the equilibrium) should not affect market outcomes, but in laboratory experiments they do. We build a simple dynamic model of double auction markets with "zero-intelligence" (ZI) computer traders that accounts for many, though not all, of the discrepancies between the data and the Walrasian tatonnement predictions. Success of the model in organizing the data, and decomposing various consequences of price controls, shows that the simple ZI model is a powerful tool to gain insights into the dynamics of market institutions.

Keywords: Auctions; Allocative Efficiency; Cost-Benefit Analysis (search for similar items in EconPapers)
JEL-codes: D44 D61 (search for similar items in EconPapers)
Date: 2000-03-01
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Citations: View citations in EconPapers (3)

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Related works:
Working Paper: Double Auction Dynamics: Structural Effects of Non-binding Price Controls (2008)
Working Paper: Double Auction Dynamics: Structural Effects of Non-binding Price Controls (2008)
Journal Article: Double auction dynamics: structural effects of non-binding price controls (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:ysm:somwrk:ysm1

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