Footnote:
In: American Economic Review, Vol. 101(7), pp. 3196-3220, 2011
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments April 2, 2010 erstellt
Description:
We study the classic Gale (1963) economy using laboratory markets. Tatonnement theory predicts prices will diverge from an equitable interior equilibrium towards infinity or zero depending only on initial prices. The inequitable equilibria selected by these dynamics give all gains from exchange to one side of the market. Our results show surprisingly strong support for these predictions. In most sessions one side of the market eventually outgains the other by more than twenty times, leaving the disadvantaged side to trade for mere pennies. We also find evidence that these dynamics are sticky, resisting exogenous interventions designed to reverse their trajectories