Inflation and Expectations in Experimental Markets
- Creators
- Daniels, Brian P.
-
Plott, Charles R.
Abstract
A total of nine experimental markets were studied. Seven of these involved eleven to twelve periods of inflation at a constant percentage and then two or three periods of no inflation. Two experiments involved no inflation for twelve periods and then inflation at a constant rate for three periods. In all but three markets, participants were asked to guess the mean price of the upcoming market period before they had any information about the parameters for that period. The subject with the best guess was given a financial reward in addition to any profit earned in the market. Convergence properties are compared. Rational expectations models are tested and the structure of forecasts are studied. In general the rational expectations models capture much of what is observed but paradoxes exist in the data and in the application of the models.
Additional Information
Revised. Original dated to May 1987. The financial support of the National Science Foundation and the Caltech Program of Enterprise and Public Policy is gratefully acknowledged. The authors also wish to thank David Grether, Kemal Guler, Jeffrey Dubin, Thomas Saving, and Edward Zanelli. Published as Daniels, Brian P., and Charles R. Plott. "Inflation and expectations in experimental markets." Bounded rational behavior in experimental games and markets. Springer, Berlin, Heidelberg, 1988. 198-218.Attached Files
Submitted - sswp634.pdf
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Additional details
- Eprint ID
- 81319
- Resolver ID
- CaltechAUTHORS:20170911-150800321
- NSF
- Caltech Program of Enterprise and Public Policy
- Created
-
2017-09-11Created from EPrint's datestamp field
- Updated
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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
- 634