Crockett, Sean; Oprea, Ryan; Plott, Charles - In: American Economic Review 101 (2011) 7, pp. 3196-3220
We study David Gale's (1963) economy using laboratory markets. Tatonnement theory predicts prices will diverge from an equitable interior equilibrium toward infinity or zero depending only on initial prices. The inequitable equilibria determined by these dynamics give all gains from exchange to...