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- W3049277968 abstract "We study the stability of price dynamics when endowments change by a laboratory market experiment of double auction. We consider a two-commodity exchange economy based on the Gale example, in which there are consumers with non-smooth preferences and exists a unique interior equilibrium. Keeping preferences and total amounts of the commodities fixed, we change individual endowments without informing subjects of when to switch so that stability of the equilibrium in Walrasian tatonnement dynamics is reversed in the middle of the experiment. We observe that, the tendency of divergence from the equilibrium is switched to convergence to the equilibrium when endowments change from an unstable setting to a stable setting, and vice versa. Theoretical predictions on movements of transaction prices work better when the interior equilibrium is unstable than when it is stable. Moreover, efficiency is higher when the interior equilibrium is unstable than when it is stable. Our observations reinforce experimental results of the Walrasian dynamics by examining a simple economy in which implausible outcomes are predicted." @default.
- W3049277968 created "2020-08-21" @default.
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- W3049277968 date "2020-01-01" @default.
- W3049277968 modified "2023-09-23" @default.
- W3049277968 title "Walrasian Dynamics with Endowment Changes: The Gale Example in a Laboratory Market Experiment" @default.
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