A Note on 'Experimental Auction Markets and the Walrasian Hypothesis'
- Creators
- Nelson, Forrest D.
Abstract
This note serves to correct an erroneous inference regarding price dynamics and to graphically illustrate the importance of model specification in the context of a very simple and fascinating structure. In an earlier JPE article, Vernon Smith concluded that excess supply by itself was an unreliable predictor of the speed of price adjustment. On the basis of regression procedures applied to experimental data he found that the potential rent to be captured exerts the dominant influence. Two alternative statistical procedures, a Tobit specification and a nonparametric test, dramatically deny this inference. Excess supply dominates excess rent as a predictor of the rate of adjustment, but in fact neither Hypothesis adequately captures the random behavior of price movement.
Additional Information
Vernon Smith suggested the possible application of limited dependent variable techniques and Charles Plott provided helpful discussion and encouragement. Viewpoints expressed and responsibility for errors or omission or commission are those of the author.Attached Files
Submitted - sswp307.pdf
Files
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Additional details
- Eprint ID
- 82333
- Resolver ID
- CaltechAUTHORS:20171012-163951246
- Created
-
2017-10-16Created from EPrint's datestamp field
- Updated
-
2019-10-03Created from EPrint's last_modified field
- Caltech groups
- Social Science Working Papers
- Series Name
- Social Science Working Paper
- Series Volume or Issue Number
- 307