The Walrasian Tatonnement to Economize on Cognitive Transaction Costs: An Experiment

@inproceedings{Pouget2001TheWT,
  title={The Walrasian Tatonnement to Economize on Cognitive Transaction Costs: An Experiment},
  author={S{\'e}bastien Pouget},
  year={2001}
}
This paper compares experimentally the price formation on a Walrasian Tatonnement and on a Call Market in a common value environment with insiders and gains from trade inspired by Plott and Sunder (1982). A game-theoretical analysis shows that these two institutions are strategically equivalent. In the experiment, the informational efficiency is almost perfect on the two trading venues indicating that agents coordinate on the fully revealing equilibrium. However, the gains from trade are higher… CONTINUE READING