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Market Experiment Results.6

Market Experiment Results.6 - Ordinarily price would...

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Predicted total surplus (sum of buyer’s surpluses and seller’s surpluses) over all eight rounds was 400; actual surplus was 333, so there was a 17% loss in efficiency due to buyers with higher valuations going dissatisfied. There is only weak evidence that buyers with higher reservation prices were somewhat more successful in completing transactions.
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Unformatted text preview: Ordinarily, price would increase in response to excess demand – a price ceiling thwarts the normal adjustment process that assures units are allocated to buyers with the highest valuations. Reservation price Transactions Completed Success Rate 3.25 7/8 88% 3.00 6/8 75% 2.75 5/8 63% 2.50 2/8 25% 2.25 7/8 88% 2.00 5/8 63%...
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