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Learning and market clearing: theory and experiments. (English) Zbl 1367.91070
Summary: This paper investigates theoretically and experimentally whether traders learn to use market-clearing trading institutions or whether other (inefficient) market institutions can survive in the long run. Using a framework with boundedly rational traders, we find that market-clearing institutions are always stable under a general class of learning dynamics. However, we show that there exist other, non-market-clearing institutions that are also stable. Therefore, in the long run, traders may fail to coordinate exclusively on market-clearing institutions. Using a replica-economies approach, we find the results to be robust to large market size. The theoretical predictions were confirmed in a series of platform choice experiments. Traders coordinated on platforms predicted to be stable, including market-clearing as well as non-market-clearing ones, while platforms predicted to be unstable were avoided in the long run.

91B24 Microeconomic theory (price theory and economic markets)
91A26 Rationality and learning in game theory
91A15 Stochastic games, stochastic differential games
Full Text: DOI
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