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The Hayek hypothesis and long run competitive equilibrium: an experimental investigation

Shachat, J.; Zhang, Z.

The Hayek hypothesis and long run competitive equilibrium: an experimental investigation Thumbnail


Authors

Z. Zhang



Abstract

We report on an experiment investigating whether the Hayek Hypothesis (Smith, 1982) extends to the long run setting. We consider two environments; one with a production technology having a U-shaped long run average cost curve and a single competitive equilibrium, and another with a constant long run average cost curve. We present alternative efficient production plans as a menu of fixed and marginal cost pairs. In both environments, we observe convergence to long run competitive equilibrium prices and quantities typically within six long run decision horizons.

Citation

Shachat, J., & Zhang, Z. (2017). The Hayek hypothesis and long run competitive equilibrium: an experimental investigation. The Economic Journal, 127(599), 199-228. https://doi.org/10.1111/ecoj.12249

Journal Article Type Article
Acceptance Date Feb 6, 2015
Online Publication Date Oct 5, 2015
Publication Date Feb 1, 2017
Deposit Date Dec 18, 2014
Publicly Available Date Mar 29, 2024
Journal The Economic Journal
Print ISSN 0013-0133
Electronic ISSN 1468-0297
Publisher Oxford University Press
Peer Reviewed Peer Reviewed
Volume 127
Issue 599
Pages 199-228
DOI https://doi.org/10.1111/ecoj.12249
Keywords Experiment, Double auction, Hayek hypothesis, Long run competitive equilibrium, Bounded rationality.
Public URL https://durham-repository.worktribe.com/output/1439567

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Copyright Statement
This is the accepted version of the following article: Shachat, J. and Zhang, Z. (2017), The Hayek Hypothesis and Long-run Competitive Equilibrium: An Experimental Investigation. The Economic Journal, 127(599): 199-228, which has been published in final form at https://doi.org/10.1111/ecoj.12249. This article may be used for non-commercial purposes in accordance With Wiley Terms and Conditions for self-archiving.





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