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Testing neoclassical competitive market theory in the field

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  • John List

Abstract

Walrasian tatonnement has been a fundamental assumption in economics ever since Walras' general equilibrium theory was introduced in 1874. Nearly a century after its introduction, Vernon Smith relaxed the Walrasian tatonnement assumption by showing that neoclassical competitive market theory explains the equilibrating forces in ""double- auction"" markets. I make a next step in this evolution by exploring the predictive power of neoclassical theory in decentralized naturally occurring markets. Using data gathered from two distinct markets--the sports card and collector pin markets--I find a tendency for exchange prices to approach the neoclassical competitive model prediction after a few market periods.

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  • John List, 2002. "Testing neoclassical competitive market theory in the field," Artefactual Field Experiments 00082, The Field Experiments Website.
    • Handle: RePEc:feb:artefa:00082
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    Citations

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    Cited by:

    1. Giuseppe Attanasi & Samuele Centorrino & Elena Manzoni, 2020. "Zero-Intelligence vs. Human Agents: An Experimental Analysis of the Efficiency of Double Auctions and Over-the-Counter Markets of Varying Sizes," Department of Economics Working Papers 20-04, Stony Brook University, Department of Economics.
    2. John List, 2020. "2020: A Summary of Framed Field Experiments on fieldexperiments.com: The Who's, What's Where's, and When's," Framed Field Experiments 00716, The Field Experiments Website.
    3. John A. List, 2014. "Using Field Experiments to Change the Template of How We Teach Economics," The Journal of Economic Education, Taylor & Francis Journals, vol. 45(2), pages 81-89, June.
    4. John List, 2019. "A Summary Of Papers On Fieldexperiments.Com: All Field Experiments Posted," Artefactual Field Experiments 00650, The Field Experiments Website.
    5. John List, 2023. "2022: A Summary Of Artefactual Field Experiments On Fieldexperiments.Com: The Who'S, What'S, Where'S, And When'S," Artefactual Field Experiments 00767, The Field Experiments Website.
    6. John List, 2019. "Summary Data of Natural Field Experiments Published on fieldexperiments.com," Natural Field Experiments 00677, The Field Experiments Website.
    7. Levitt, Steven D. & List, John A., 2009. "Field experiments in economics: The past, the present, and the future," European Economic Review, Elsevier, vol. 53(1), pages 1-18, January.
    8. Attanasi, Giuseppe & Centorrino, Samuele & Moscati, Ivan, 2016. "Over-the-counter markets vs. double auctions: A comparative experimental study," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 63(C), pages 22-35.
    9. John A. List, 2004. "Testing Neoclassical Competitive Theory in Multilateral Decentralized Markets," Journal of Political Economy, University of Chicago Press, vol. 112(5), pages 1131-1156, October.
    10. John List, 2002. "Testing neoclassical competitive market theory in the field: Some pilot results," Framed Field Experiments 00172, The Field Experiments Website.
    11. John List, 2020. "2020: A Summary of Artefactual Field Experiments on fieldexperiments.com: The Who's, What's, Where's, and When's," Artefactual Field Experiments 00721, The Field Experiments Website.
    12. Hallsworth, Michael & List, John A. & Metcalfe, Robert D. & Vlaev, Ivo, 2017. "The behavioralist as tax collector: Using natural field experiments to enhance tax compliance," Journal of Public Economics, Elsevier, vol. 148(C), pages 14-31.
    13. Bulte, Erwin & Kontoleon, Andreas & List, John & Turley, Ty & Voors, Maarten, 2017. "From personalized exchange towards anonymous trade: A field experiment on the workings of the invisible hand," Journal of Economic Behavior & Organization, Elsevier, vol. 133(C), pages 313-330.
    14. John List, 2023. "2022: A Summary Of Framed Field Experiments On Fieldexperiments.Com: The Who'S, What'S, Where'S, And When'S," Framed Field Experiments 00768, The Field Experiments Website.
    15. John List, 2019. "A Summary of Artefactual Field Experiments On fieldexperiments.com: The Who's, What's, Where's, and When's," Artefactual Field Experiments 00671, The Field Experiments Website.
    16. Jeffrey Flory & Uri Gneezy & Kenneth Leonard & John List, 2012. "Sex, competitiveness, and investment in offspring: On the origin of preferences," Artefactual Field Experiments 00072, The Field Experiments Website.
    17. Margherita Comola & Marcel Fafchamps, 2015. "An Experimental Study of Decentralized Link Formation with Competition," NBER Working Papers 21758, National Bureau of Economic Research, Inc.

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