Publication detailsShachat, J. & Zhang, Z. (2017). The Hayek hypothesis and long run competitive equilibrium: an experimental investigation. Economic Journal 127(599): 199-228.
- Publication type: Journal Article
- ISSN/ISBN: 0013-0133, 1468-0297
- DOI: 10.1111/ecoj.12249
- Keywords: Experiment, Double auction, Hayek hypothesis, Long run competitive equilibrium, Bounded rationality.
- Further publication details on publisher web site
- Durham Research Online (DRO) - may include full text
Author(s) from Durham
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.