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Do markets drive out lemmings - or vice versa?

Hey, J.D. and Morone, A. (2004) Do markets drive out lemmings - or vice versa? Economica, 71 (284). pp. 637-659. ISSN 0013-0427

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Abstract

This paper investigates experimentally a market inspired by two strands of literature: on herd behaviour in non-market situations, and on the aggregation of private information in markets. The first strand suggests that socially undesirable herd behaviour may result when information is private; the second suggests that in a market context the price mechanism may cause the private information to be aggregated correctly and efficiently. This latter therefore suggests that socially undesirable behaviour may be eliminated through the market. We test this experimentally, and find that socially undesirable behaviour may result: the market is misled by agents privately optimizing.

Item Type: Article
Institution: The University of York
Academic Units: The University of York > Economics and Related Studies (York)
Depositing User: York RAE Import
Date Deposited: 05 Jun 2009 14:06
Last Modified: 05 Jun 2009 14:06
Published Version: http://dx.doi.org/10.1111/j.0013-0427.2004.00392.x
Status: Published
Publisher: Blackwell Publishing Ltd
Identification Number: 10.1111/j.0013-0427.2004.00392.x
URI: http://eprints.whiterose.ac.uk/id/eprint/6034

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