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Extracting Valuable Data from Classroom Trading Pits

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  • Theodore C. Bergstrom
  • Eugene Kwok

Abstract

How well does competitive theory explain the outcome in experimental markets. The authors examined the results of a large number of classroom trading experiments that used a pit-trading design found in Experiments with Economic Principles , an introductory economics textbook by Bergstrom and Miller. They compared experimental outcomes with predictions of competitive-equilibrium theory and with those of a simple profit-splitting theory. Neither theory was entirely successful in explaining the data, although in the first rounds of trading there was significant profit splitting and, as traders became more experienced, outcomes were closer to those predicted by competitive theory.

Suggested Citation

  • Theodore C. Bergstrom & Eugene Kwok, 2005. "Extracting Valuable Data from Classroom Trading Pits," The Journal of Economic Education, Taylor & Francis Journals, vol. 36(3), pages 220-235, July.
    • Handle: RePEc:taf:jeduce:v:36:y:2005:i:3:p:220-235
    DOI: 10.3200/JECE.36.3.220-235
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    References listed on IDEAS

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    1. Vernon L. Smith, 1962. "An Experimental Study of Competitive Market Behavior," Journal of Political Economy, University of Chicago Press, vol. 70(3), pages 322-322.
    2. Robert E. Kuenne (ed.), 1990. "Microeconomics," Books, Edward Elgar Publishing, volume 0, number 564.
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    Cited by:

    1. Humberto Llavador & Marcus Giamattei, 2017. "Teaching microeconomic principles with smartphones – lessons from classroom experiments with classEx," Economics Working Papers 1584, Department of Economics and Business, Universitat Pompeu Fabra.
    2. So, Tony, 2020. "Classroom experiments as a replication device," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 86(C).
    3. Ted Bergstrom, 2004. "Experimental Economics and Chamberlin's Excess Trading Conjecture," Experimental 0407001, University Library of Munich, Germany.
    4. Miller, John H. & Tumminello, Michele, 2015. "Bazaar economics," Journal of Economic Behavior & Organization, Elsevier, vol. 119(C), pages 163-181.

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    JEL classification:

    • C9 - Mathematical and Quantitative Methods - - Design of Experiments

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