Markets and the Use of Knowledge---Testing the "Hayek Hypothesis" in Experimental Stock Markets
A broad strand in experimental economics has been devoted to testing the "Hayek hypothesis", which is commonly understood as the proposition that competitive markets conform to basic efficiency postulates. The precise content of this hypothesis, however, often remains fairly vague. We begin by restating the "Hayek hypothesis" in the light of theoretical work, which leads us to identifying three central elements of the hypothesis. Building on this restatement, we review the literature on experimental (market) economics and show how this literature has progressed from testing the first element of the "Hayek hypothesis" to testing all three elements simultaneously. Very recently, a number of scholars have moved these tests out of the laboratory, establishing political stock markets as a new type of field experiment. These political stock markets can be viewed as the toughest tests the "Hayek hypothesis" has been subjected to so far, and they have tended to support it. In the final section of the present paper, we outline some design features of the "Passauer Wahlboerse", an ongoing political stock market experiment being run at the Universitaet Passau, and indicate a few differences between this experiment and previous work.
When requesting a correction, please mention this item's handle: RePEc:wpa:wuwpex:9405001. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (EconWPA)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.