Impact of Ethnicities on Market Outcome: Results of Market Experiments in Kenya
AbstractWe study market exchange in the laboratory by a multiethnic experiment in Kenya. The subjects of our experiment are of three ethnicities, Kikuyu, Luo, and Kalenjin. Our model contains two types of consumers and two kinds of commodities, and three competitive equilibria exist. The two equilibria with the lowest, and highest relative prices are beneficial for one type of the consumers, and the intermediate price gives an equitable allocation. The tatonnement dynamics however predict that relative prices diverge from the intermediate equilibrium towards the lowest equilibrium or the highest equilibrium depending on initial prices. In order to examine how much effect the ethnicities of subjects have on the equilibrium selection, we conducted manual experiments of pit market trading with different combinations of ethnicities of subjects. Our result shows strong support for the convergence to the intermediate equilibrium when Kalenjin subjects participated, whereas no such data are obtained without them. In addition, the frequencies of transactions with Kalenjin subjects were significantly less than that with the other subjects only, and the less frequent transactions resulted in the more efficient outcomes of the experimental market.
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Bibliographic InfoPaper provided by Research Institute for Economics & Business Administration, Kobe University in its series Discussion Paper Series with number DP2011-10.
Length: 26 pages
Date of creation: Mar 2011
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Economic Experiment; Kenya; Pit Market; Perfect Competition; Multiple Equilibria;
Find related papers by JEL classification:
- C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
- D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies
This paper has been announced in the following NEP Reports:
- NEP-AFR-2011-03-26 (Africa)
- NEP-ALL-2011-03-26 (All new papers)
- NEP-EVO-2011-03-26 (Evolutionary Economics)
- NEP-EXP-2011-03-26 (Experimental Economics)
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