We study multiple-unit, laboratory experimental call markets in which orders are cleared by a single price at a scheduled "call". The markets are independent trading "days" with two calls each day preceded by continuous and public order flow. Markets approach the competitive equilibrium over time. The price formation dynamics operate through the flow of bids and asks configured as the "jaws" of the order book with contract execution featuring elements of an underlying mathematical principle, the Newton-Raphson method for solving systems of equations. Both excess demand and its slope play a systematic role in call market price discovery.JEL codes: C92, D44, D47, D58, G14
This paper develops a non-parametric test for consistency of players' behavior in a series of games with the Quantal Response Equilibrium (QRE). The test exploits a characterization of the equilibrium choice probabilities in any structural QRE as the gradient of a convex function, which thus satisfies the cyclic monotonicity inequalities. Our testing procedure utilizes recent econometric results for moment inequality models. We assess our test using lab experimental data from a series of generalized matching pennies games. We reject the QRE hypothesis in the pooled data, but it cannot be rejected in the individual data for over half of the subjects.JEL codes: C12, C14, C57, C72, C92
How does communication among voters affect turnout? And who benefits from it? In a laboratory experiment in which subjects, divided into two competing parties, choose between costly voting and abstaining, we study three pre-play communication treatments: No Communication, a control; Public Communication, where all voters exchange public messages through computer chat; and Party Communication, where messages are also exchanged but only within one's own party. Our main finding is that communication always benefits the majority party by increasing its expected turnout margin and, hence, its expected margin of victory and probability of winning the election. Party communication increases overall turnout, while public communication increases turnout with a high voting cost but decreases it with a low voting cost. With communication, we find essentially no support for the standard Nash equilibrium predictions and limited consistency with correlated equilibrium. JEL codes: C72, C92, D72
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