Experimental Markets and Chamberlin's Excess Trading Conjecture
- Author(s): Bergstrom, Ted
- et al.
Edward Chamberlin conjectured that the number of trades in realistic trading systems is likely to exceed that predicted by competitive equilibrium theory. He supported this conjecture by data from a large number of classroom experiments and with a plausible argument based on a numerical example. This paper states and proves a theorem that supports and illuminates Chamberlin's intuition, supplies examples of trading processes that lead to excess trading, and presents some additional experimental evidence.