Skills in the Marketplace: Market Equilibrium, Personality and Ability in a Field-Based Experiment

Nathan Fiala

No 30, Working Papers from University of Connecticut, Department of Agricultural and Resource Economics, Charles J. Zwick Center for Food and Resource Policy

Abstract: Classic economic theory predicts that markets will clear, leaving little or no marginal gains from trade left on the table. Laboratory experiments have largely confirmed this, though the results of recent field experiments have been mixed, with some artefactual markets in developing countries performing relatively inefficiently. I create a multi-round trading market in Uganda in order to explore the efficiency of trading and test if individual traits predict market efficiency and bargaining success. I use a rich dataset on individual characteristics, including indicators on personality, wealth and human capital. I find that measures of personality and human capital of the buyers and sellers predict levels of efficiency within rounds. The personality indicators are less correlated with individual success, though human capital remains important. Finally, rents obtained in the experiment correlate with wealth levels of participants two years later. The results suggest that market prowess can predict some lifetime outcomes and suggest an important role for individual personality in social efficiency outcomes. Future work on market and social efficiency outcomes will need to include an explicit role for individual personality.

Keywords: Experimental market; market interactions; market efficiency; developing markets; personality; individual ability (search for similar items in EconPapers)
JEL-codes: C91 D14 J24 (search for similar items in EconPapers)
Pages: 43 pages
Date: 2014-09
New Economics Papers: this item is included in nep-cbe and nep-exp
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Persistent link: https://EconPapers.repec.org/RePEc:zwi:wpaper:30

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