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Are stockholders rational? An experimental approach to testing the competitive storage model

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  • Pfuderer, Simone

Abstract

The competitive storage model has been the main workhorse of the analysis of the role of storage in commodity price formation since Gustafson proposed his model in 1958. The main approach to testing the competitive storage model has been the comparison of the characteristics of the predicted prices series with actual commodity price series. This paper introduces a new approach to testing the competitive storage model. A relatively simple model is taken to the experimental laboratory. Participants in the experiment are asked make storage decisions within a competitive storage model framework. Their behaviour and the resulting price series are compared to the model assumptions and predictions. The experiment will be run at the University of Trento in April 2014.

Suggested Citation

  • Pfuderer, Simone, 2014. "Are stockholders rational? An experimental approach to testing the competitive storage model," 88th Annual Conference, April 9-11, 2014, AgroParisTech, Paris, France 170537, Agricultural Economics Society.
  • Handle: RePEc:ags:aesc14:170537
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    File URL: http://ageconsearch.umn.edu/record/170537/files/Simone_Pfuderer_Discussion%20Paper%20Pfuderer.pdf
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    References listed on IDEAS

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    1. Angus Deaton & Guy Laroque, 1992. "On the Behaviour of Commodity Prices," Review of Economic Studies, Oxford University Press, vol. 59(1), pages 1-23.
    2. Deaton, Angus & Laroque, Guy, 1996. "Competitive Storage and Commodity Price Dynamics," Journal of Political Economy, University of Chicago Press, vol. 104(5), pages 896-923, October.
    3. Williams,Jeffrey C. & Wright,Brian D., 2005. "Storage and Commodity Markets," Cambridge Books, Cambridge University Press, number 9780521023399.
    4. Norbert Funke & Weifeng Wu & Yanliang Miao, 2011. "Reviving the Competitive Storage Model; A Holistic Approach to Food Commodity Prices," IMF Working Papers 11/64, International Monetary Fund.
    5. David M Arseneau & Sylvain Leduc, 2013. "Commodity Price Movements in a General Equilibrium Model of Storage," IMF Economic Review, Palgrave Macmillan;International Monetary Fund, vol. 61(1), pages 199-224, April.
    6. Gustafson, Robert L., 1958. "Carryover levels for grains: A method for determining amounts that are optimal under specified conditions," Technical Bulletins 157231, United States Department of Agriculture, Economic Research Service.
    7. Cafiero, Carlo & Bobenrieth H., Eugenio S.A. & Bobenrieth H., Juan R.A. & Wright, Brian D., 2011. "The empirical relevance of the competitive storage model," Journal of Econometrics, Elsevier, vol. 162(1), pages 44-54, May.
    8. Christophe Gouel, 2013. "Comparing Numerical Methods for Solving the Competitive Storage Model," Computational Economics, Springer;Society for Computational Economics, vol. 41(2), pages 267-295, February.
    9. Alexander L. Brown & Zhikang Eric Chua & Colin F. Camerer, 2009. "Learning and Visceral Temptation in Dynamic Saving Experiments," The Quarterly Journal of Economics, Oxford University Press, vol. 124(1), pages 197-231.
    10. Klaus Abbink & Thomas Jayne & Lars Moller, 2011. "The Relevance of a Rules-based Maize Marketing Policy: An Experimental Case Study of Zambia," Journal of Development Studies, Taylor & Francis Journals, vol. 47(2), pages 207-230.
    11. Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer;Economic Science Association, vol. 10(2), pages 171-178, June.
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    Keywords

    Agribusiness; Agricultural Finance; Demand and Price Analysis;

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