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General equilibrium, markets, macroeconomics and money in a laboratory experimental environment

Author

Listed:
  • Peng Lian

    (Department of Government and Public Administration, Chinese University of Hong Kong, Shatin, NT, HONG KONG)

  • Charles R. Plott

    (Division of the Humanities and Social Sciences, California Institute of Technology, Pasadena, CA 91125, USA)

Abstract

This paper reports on the use of laboratory experimental techniques to create relatively complete economic systems. The creation of these market systems reflects a first attempt to explore the nature of inherently interdependent environments and to assess the ability of simultaneous equations equilibrium models like the classical static general competitive equilibrium model, to predict aspects of system behaviors. In addition, the impact of the quantity of a fiat money was studied. The economies were successfully created. Classical models capture much of what was observed.

Suggested Citation

  • Peng Lian & Charles R. Plott, 1998. "General equilibrium, markets, macroeconomics and money in a laboratory experimental environment," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 12(1), pages 123-146.
  • Handle: RePEc:spr:joecth:v:12:y:1998:i:1:p:123-146
    Note: Received: May 21, 1996; revised version: May 21, 1997
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    Citations

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    Cited by:

    1. Romain Baeriswyl & Camille Cornand, 2015. "The distortionary effect of monetary policy : credit expansion vs. lump-sum transfers in the lab," Working Papers 1516, Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon.
    2. Sean Crockett, 2013. "Price Dynamics In General Equilibrium Experiments," Journal of Economic Surveys, Wiley Blackwell, vol. 27(3), pages 421-438, July.
    3. Noussair, Charles & Plott, Charles & Riezman, Raymond, 2007. "Production, trade, prices, exchange rates and equilibration in large experimental economies," European Economic Review, Elsevier, vol. 51(1), pages 49-76, January.
    4. Riedl, Arno & van Winden, Frans, 2007. "An experimental investigation of wage taxation and unemployment in closed and open economies," European Economic Review, Elsevier, vol. 51(4), pages 871-900, May.
    5. Ricciuti, Roberto, 2008. "Bringing macroeconomics into the lab," Journal of Macroeconomics, Elsevier, vol. 30(1), pages 216-237, March.
    6. repec:pit:wpaper:334 is not listed on IDEAS
    7. Steven Gjerstad, 2013. "Price dynamics in an exchange economy," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 52(2), pages 461-500, March.
    8. Roos, Michael W. M. & Luhan, Wolfgang J., 2008. "As if or What? – Expectations and Optimization in a Simple Macroeconomic Environment," Ruhr Economic Papers 55, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    9. Avi Weiss & Gabriele Camera & Dror Goldberg, 2016. "Endogenous Market Formation and Monetary Trade: an Experiment," Working Papers 2016-04, Bar-Ilan University, Department of Economics.
    10. John Hey & Daniela Cagno, 1998. "Sequential Markets: An Experimental Investigation of Clower's Dual-Decision Hypothesis," Experimental Economics, Springer;Economic Science Association, vol. 1(1), pages 63-85, June.
    11. M. Bigoni & G. Camera & M. Casari, 2015. "Money and the Scale of Cooperation," Working Papers wp1045, Dipartimento Scienze Economiche, Universita' di Bologna.
    12. Ortmann, Andreas, 2003. "Charles R. Plott's collected papers on the experimental foundations of economic and political science," Journal of Economic Psychology, Elsevier, vol. 24(4), pages 555-575, August.
    13. repec:eee:jeborg:v:141:y:2017:i:c:p:64-82 is not listed on IDEAS
    14. Michael W.M. Roos & Wolfgang J. Luhan, 2008. "As if or What? – Expectations and Optimization in a Simple Macroeconomic Environment," Ruhr Economic Papers 0055, Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen.
    15. Riedl, Arno & van Winden, Frans, 2012. "Input versus output taxation in an experimental international economy," European Economic Review, Elsevier, vol. 56(2), pages 216-232.
    16. Daniela Puzzello & Brit Grosskpof & John Duffy, 2011. "Gift Exchange versus Monetary Exchange: Experimental Evidence," 2011 Meeting Papers 1153, Society for Economic Dynamics.
    17. repec:zbw:rwirep:0055 is not listed on IDEAS
    18. Paul Brewer & Maria Huang & Brad Nelson & Charles Plott, 2002. "On the Behavioral Foundations of the Law of Supply and Demand: Human Convergence and Robot Randomness," Experimental Economics, Springer;Economic Science Association, vol. 5(3), pages 179-208, December.
    19. repec:kap:expeco:v:20:y:2017:i:3:d:10.1007_s10683-016-9507-y is not listed on IDEAS
    20. repec:pit:wpaper:449 is not listed on IDEAS
    21. Bachmann, Ruediger, 2004. "Rationalizing allocation data--a nonparametric Walrasian theory when prices are absent or non-Walrasian," Journal of Mathematical Economics, Elsevier, vol. 40(3-4), pages 271-295, June.
    22. Noussair, C.N. & Pfajfar, D. & Zsiros, J., 2011. "Frictions, Persistence, and Central Bank Policy in an Experimental Dynamic Stochastic General Equilibrium Economy," Discussion Paper 2011-030, Tilburg University, Center for Economic Research.

    More about this item

    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General
    • D46 - Microeconomics - - Market Structure, Pricing, and Design - - - Value Theory
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation

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