Wednesday, September 28, 2011

Efficient Markets Classroom Experiment: Example from Yale

Toward the last fifteen minutes of this class by John Geanakoplos in Yale, he conducts a simple classroom experiment on the efficient market hypothesis basically asking students to record willingness to accept and willingness to pay for tickets he distributes and then getting them to trade. The experiment takes a while to set up and to record the results (which is always nice to see as illustrates that it does take at least some effort to get markets working!) but, in general, a really nice demonstration of how markets work. The tatonnement process worked out among the students is interesting to watch.

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