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A Market-Clearing Classroom Experiment

Author

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  • Radim Bohacek

Abstract

This paper describes a classroom experiment demnstrating the price mechanism and the clearing of the markets in an endowment economy. Participants receive random endowments of two goods they may trade in order to maximize a given utility function. A market-clearing price is reached when no mutually beneficial trades are possible. The outcome is truly endogenous with no reservation prices or willingness to trade imposed on the participants. A problem set allows the participants to study the equilibrium outcome analytically. The experiment can be used in intermediate micro- and macroeconomic courses.

Suggested Citation

  • Radim Bohacek, 2002. "A Market-Clearing Classroom Experiment," CERGE-EI Working Papers wp193, The Center for Economic Research and Graduate Education - Economics Institute, Prague.
    • Handle: RePEc:cer:papers:wp193
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    File URL: http://www.cerge-ei.cz/pdf/wp/Wp193.pdf
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    Cited by:

    1. W D A Bryant, 2009. "General Equilibrium:Theory and Evidence," World Scientific Books, World Scientific Publishing Co. Pte. Ltd., number 6875, August.
    2. Paul Oslington, 2012. "General Equilibrium: Theory and Evidence," The Economic Record, The Economic Society of Australia, vol. 88(282), pages 446-448, September.

    More about this item

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • A20 - General Economics and Teaching - - Economic Education and Teaching of Economics - - - General
    • D50 - Microeconomics - - General Equilibrium and Disequilibrium - - - General

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