4. Experiment Information
Theoretical Predictions:
Quantity: 10 units
Price: $3.90-$4.00
Net Economic Benefits: $20
What were we supposed to learn in the experiment?
Without any central guidance, a free market will lead to equilibrium between supply and demand (as if by “an invisible hand”)
At this equilibrium the net economic benefits are greatest to the society – we have maximized the “wealth of the nation”
Notes:
DA market rules similar to those in major securities markets (e.g., NYSE).
Experimental evidence shows that double auction market is generally highly efficient, even with few buyers/sellers.

6. Experiment Results
Quantity
Price (range)
Price (average)
Efficiency
Period 1 8
3.00 – 4.20
$3.78
92%
Period 2
Period 3
Period 4
Period 5
Efficiency: % of total economic benefits available captured. Perfectly competitive market has efficiency of 100%.