Competitive Equilibrium and Classroom Pit Markets

Abstract

Efforts to show the relevance of economic concepts early in a student's education can prevent the “economics is not very useful” attitude from setting in. The author extends the work of Holt to describe a pit-market experiment used to illustrate the concept of competitive equilibrium. In addition to detailed instructions as to how to set up and conduct a pit-market experiment, the author discusses features of the data and provides accompanying materials, including software for the display of the data.

Key Words:

• classroom experiment
• competitive equilibrium
• experimental economics
• pit market

Additional information

Notes on contributors

Bradley J. Ruffle

Bradley J. Ruffle is an assistant professor of economics at Ben-Gurion University (e-mail: [email protected]). The author thanks Rachel Croson, David Dickinson, and two referees for valuable comments. The materials discussed in this article are available from the author upon request or from his Web site: http://econ.bgu.ac.il/facultym/bradley/pitmarket.zip.