Adam Smith identified two key components in the wealth creation process of human societies: exchange and specialization. More than two centuries later relatively little is understood about the underlying process by which people build exchange systems and discover comparative advantage. In this...

Policymakers are often tempted to implement various new laws and regulations intended to prevent gasoline price gouging. We recently carried out economic experiments to test such anti-gouging measures as mandated divorcement and uniform pricing, and we found that those regulations actually harm...

Zone pricing in wholesale gasoline markets is a contentious topic in the public policy debate. Refiners contend that they use zone pricing to be competitive with local rivals. Critics claim that zone pricing benefits the oil industry and harms consumers. With a controlled experiment, we...

Modern economics, whether in the orthodox tradition of Paul Samuelson or the heterodox tradition of Ludwig von Mises, ultimately looks to explain economic outcomes, that is, the effects of human action. In their own way, neither distinguish the consequences of human action from the origins of...

We compare first-price auctions to an exchange process that we term 'multilateral negotiations.' In multilateral negotiations, a buyer solicits price offers for a homogeneous product from sellers with privately known costs, and then plays the sellers off one another to obtain additional price...

Market power arises in many posted-offer markets and drives a distinction between the competitive prediction and the Nash equilibrium for the market viewed as a stage game. Pricing patterns in such markets tend to be characterized by Edgeworth cycles that deteriorate as the sessions progress....

In this paper we explore how hominin behavior responds to the distribution of resources in territorial conflict. We develop an economic model to organize the findings of primatologists, isolating how resource skew and variance affect territorial ranges, as well as how they interact with unequal...

Why do people follow rules? We offer a short interdisciplinary survey on rule‐following, sketching various answers to the question offered by economists, psychologists, and philosophers. We start with a broad and colloquial notion of rules that spans from concrete, formal regulations to...

This paper examines the conceptual semantics of two keywords belonging to the English vocabulary of economics discourse, money and value (intended as exchangeable value of goods), as originally theorized by Adam Smith in Chapter IV of the Wealth of Nations. It is argued that a semantic...

This paper develops and tests implications of an oligopoly-pricing model. The model predicts that during a demand expansion, the short run competitive price is a pure strategy Nash equilibrium but in a recession, firms set prices above the competitive price. Thus, price markups over the...