Sunspots in the Laboratory
American Economic Review
vol. 95,
no. 3, June 2005
(pp. 510-529)
Abstract
We show that extrinsic or nonfundamental uncertainty influences markets in a controlled environment. This work provides the first direct evidence of sunspot equilibria. These equilibria require a common understanding of the semantics of the sunspot variable, and they appear to be sensitive to the flow of information. Sunspots always occur in a closed-book call market, but they happen only occasionally in a double auction, where inframarginal bids and offers are observable.Citation
Duffy, John, and Eric O'N. Fisher. 2005. "Sunspots in the Laboratory." American Economic Review, 95 (3): 510-529. DOI: 10.1257/0002828054201350Additional Materials
JEL Classification
- D51 Exchange and Production Economies
- E31 Price Level; Inflation; Deflation