Department of Industrial Economics, Tamkang University

Year111

Level

Book NameMarket Power and the Hayek Hypothesis: An Experimental Investigation

ChapterThe inconsistency in the literature regarding price behavior in markets with market power suggested that traders are heterogeneous in their ability to discover and exercise their influences on market price. To examine whether inequality in subjects’ market performance can be attributed to the heterogeneity of their cognitive capacity, we adopt a single-subject experimental design and inspect whether subjects can discover and exercise their market power by withholding part of their units. We use the Cognitive Reflection Test to gauge subjects’ cognitive ability and investigate whether subjects with higher cognitive abilities will be better at exercising their market power to influence the price to gain extra profits. We observe heterogenous price behavior. However, there is no evidence that higher CRT scores were associated with better price convergence to the competitive equilibrium. Further, the revelation of information only altered some subjects’ behavior.

PublisherSpringer Nature

All AuthorChie, Bin-tzong

Publish Date2023-02-16

ISSN(ISBN)9783031152931

ProjectMarket Power and the Hayek Hypothesis: An Experimental Investigation

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