Journal article
A Laboratory Experiment with a Single-Person Cobweb
Atlantic economic journal, Vol.14(2), pp.51-54
07/01/1986
DOI: 10.1007/BF02316793
Abstract
The cobweb theorem is a theory of price adjustment that proposes that static expectations will induce a counterclockwise adjustment pattern of prices and quantities around the intersection of market supply and demand functions. Static expectations are forecasts that prices will be equal to their most recently observed value. Four University of Minnesota undergraduates were asked to make output choices for the current market period and to predict prices for the next period in a sequence of market periods. These choices and predictions were used to compute the market prices. An almost regular cobweb pattern persisted for periods 12-18. While the mean and median prices were near competitive level, prices did not converge. The cobweb theory for the parameters used predicted nonconvergence with explosive oscillations. The oscillations observed were not explosive.
Details
- Title: Subtitle
- A Laboratory Experiment with a Single-Person Cobweb
- Creators
- Charles Holt - University of VirginiaAnne Villamil - University of Minnesota
- Resource Type
- Journal article
- Publication Details
- Atlantic economic journal, Vol.14(2), pp.51-54
- Publisher
- Springer Nature B.V
- DOI
- 10.1007/BF02316793
- ISSN
- 0197-4254
- eISSN
- 1573-9678
- Language
- English
- Date published
- 07/01/1986
- Academic Unit
- Economics
- Record Identifier
- 9984380416702771
Metrics
5 Record Views