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Full-Text Articles in Social and Behavioral Sciences
Sunspots In The Laboratory, John Duffy, Eric O'N. Fisher
Sunspots In The Laboratory, John Duffy, Eric O'N. Fisher
Economics
We show that extrinsic or non-fundamental 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. Extrinsic uncertainty matters when information flows slowly, as in a call market, but it need not matter when information flows quickly, as in a double auction where infra-marginal bids and offers are observable.