Cobweb Experiments
In the summer semester of 2008 and winter semester 2008/09, the lecture VWL 1 (Microeconomics) organised a business game for three weeks where students acted as providers of a fictitious product (‘Bangos’) on a competitive market. They could only adapt their production slowly to new price information. The basis of the game and its dynamic of price adjustment was a ‘‚Cobweb-Modell’. The experiments showed that also under conditions of incomplete information, the market balance is well suited to declare the pricing while having perfect competition. Here, we are summariseing the provisional results.
In the first version of the game (SS 2008) the guidelines were adjusted to a theoretically dynamic and extremely unstable balance. After very high fluctuations at the beginning, the observed price got became much closer to the equilibrium price during the experiment. With a subsequent evaluation of the players, we additionally collected data about the kind of expectation formation.
Moderation and evaluation of the experiments: Nicolai Liekfeldt, Tom Wesselmann, Alexander Reimann
Analysis of the player survey: Iris Höft, Viola Stolley
In the second version (WS 2008/09) parameter settings ensured the dynamic stability of the market balance. During the game, the market was exposed to an ‘exogenous shock’ through the introduction of a quantity subsidy. The price adjustment happened very fast into the direction of a new market balance.
Game-Moderators: Julia Opitz, Christoph Tontarra, Sebastian Zwicker