Title: Prsentation PowerPoint
1Raluca PARVULESCU
Outline
- 1. An institutional perspective
- Experimental design
- Main result convergence
- "Clumsy" behavior
- Simulations
- Final remarks
EXPERIMENTAL AGENTS CLUMSINESS, THE MAIN REASON
WHY MARKETS CONVERGE TOWARDS AN INEXISTENT
EQUILIBRIUM
2Main feature prices are decided by the market
operators themselves
1. An institutional perspective 1.1 Market
taxonomy 1.2 Price convergence issue
1.3 What predictions ?
- Posted-offer markets buyers "price takers"
One important question Price convergence (or
its absence) towards the competitive issue
3- D A markets
- prices converge towards the "competitive" level
( Nash equilibrium)
1. Theoretical predictions 1.1 Market
taxonomy 1.2 Price convergence issue
1.3 What predictions ?
- P - O markets with production "to order"
- prices converge towards the "competitive"
level, be it a Nash equilibrium or not
- P O markets with production "in advance"
- in theory, there is no Nash equilibrium, so no
convergence ? - Alger 1979
- Friedman 1988
4Does the Posted-Offer market with "advance
production" converge towards the "competitive"
issue, which is not a Nash equilibrium ?
1. Theoretical predictions 1.1 Market
taxonomy 1.2 Price convergence issue
1.3 What predictions ?
If this convergence is observed, what are the
forces accounting for it ?
- agents "clumsy" behavior observed in the
experiments - simulations
5- Supply
- Every subject was a strawberry producer
- Inventories or carryover of unfilled orders from
buyers are not permitted - At the beginning of each period a price and
output decision - Decision support
- - table with all types of costs (total, average
and marginal) - - subjects own previous results (sold output
and realised profit) - - all posted prices on the market during the
previous periods
2. Experimental design 2.1 General remarks
2.2 Specific details
- Demand
- computer simulated
- stable all along the experiment
6- 2 experiments - 9 participants in each session
- - feb- april 2006
- - 2h30 on average
- - 15 / person, on
average
2. Experimental design 2.1 General remarks
2.2 Specific details
- 2 phases - agents are alone on the market
- - agents play against each
others on a competitive market
- Theoretical benchmarks
- - the "competitive" issue price 1.3 output
200 - - the "monopoly/cartel" issue price 2
output 85
7Fig.1 Average price convergence
3. Main result convergence
8Fig 2. Prices variation coefficient
3. Main result convergence
9Fig 3. Evolution of the rationing phenomenon
4. "Clumsy" behavior
4.1 Criteria for "clumsiness "
4.1.1 Market adaptation
4.1.2 Overproduction 4.1.3 Profit
increase 4.2 Market response
10Table 1. Impact of an incurred rationing (or its
absence) on a the posted price at the next round
Rationing phenomenon intensity
Decrease
Maintaining
Increase
- "Clumsy " behavior
- 4.1 Criteria for "clumsiness "
-
- 4.1.1 Market adaptation
- 4.1.2 Overproduction
- 4.1.3 Profit increase
- 4.2 Market response
Very important
91
4
5
(23 observations)
Significant
87
10
3
(32 observations)
Null or negligible
37
21
42
(289 observations)
- 50 of the decisions are "reasonable"
- 32 of the decisions are "unreasonable"
- Subjects are very heterogeneous
114. "Clumsy " behavior 4.1 Criteria for
"clumsiness " 4.1.1 Market adaptation
4.1.2 Overproduction 4.1.3 Profit
increase 4.2 Market response
Fig 4. Evolution of the indicator of average
overproduction ( )
12- Overproduction 2 kinds of effects
- Direct effect
- agents who disrespect this rule obtain
smaller profits (44) - Indirect effect
- agents who respect this rule obtain smaller
profits too (40)
4. "Clumsy " behavior 4.1 Criteria for
"clumsiness " 4.1.1 Market adaptation
4.1.2 Overproduction 4.1.3 Profit
increase 4.2 Market response
Rationing phenomenon 18 less in the first
session
26 less in the second session
Agents are very heterogenous
13Compare the policy adopted with a reference
policy
- when the subject sold the entire produced
maintain the same policy
4. "Clumsy" behavior 4.1 Criteria for
"clumsiness " 4.1.1 Market
adaptation 4.1.2 Overproduction 4.1.3
Profit increase 4.2 Market response
- when the subject got rationed
post the same price and reduce output to the
sales level
Ex ante and ex post comparaisons of respective
profits
Table 2. Only not "irrational" decisions
considered
Table.3 All decisions considered
14Examine agents behavior impact on the market
2 individual indicators
4. "Clumsy " behavior 4.1 Criteria for
"clumsiness " 4.2 Market response
- the proportion of reasonable decisions from a
market adaptation criterion - the proportion of reasonable decisions from a
profit increase criterion (takes implicitly into
consideration the tendency to overproduce)
Correlation coefficient 41
Regression equation
Av. P 33.4 31.53 Capacity to - 97.53
Capacity to adapt
increase P to the
market (t4.33) (t2.11)
(t-6.4)
152 types of agents
- "rational" type "best-response " strategy
5. Simulations
- "clumsy" agent inspired by the human subjects
5.1 Decision rules
5.2 Results
16Fig 5. Average sales price evolution on a market
with 9 "clumsy" players
5. Simulations 5.1 Decision rules 5.2
Results
17Fig 6. Average sales price evolution on a market
with 9 players adopting a "best response"
strategy
5. Simulations 5.1 Decision rules 5.2
Results
18Fig 7. Average sales price evolution on a market
with 3 players adopting a "best response"
strategy and 6 "clumsy" players
5. Simulations 5.1 Decision rules 5.2
Results
19- Average prices seem to be converging towards the
competitve issue in the two sessions carried out
- Agents behavior seems to be far from the
"rationality" canons
6. Final remarks
- When the number of automates adopting a "clumsy"
behavior is predominant, markets stabilize.