Testing the Hayek hypothesis: Recent theoretical and experimental evidence.
Economists well understand that the work of Friedrich Hayek contains important theoretical insights. It is less often acknowledged that his work contains testable predictions about the nature of market processes. Vernon Smith termed the most important one the 'Hayek hypothesis': that gains...
| Main Authors: | , , |
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| Format: | Article |
| Language: | English |
| Published: |
Public Library of Science (PLoS)
2022-01-01
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| Series: | PLoS ONE |
| Online Access: | https://doi.org/10.1371/journal.pone.0270489 |
| _version_ | 1818193114596114432 |
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| author | Omar Al-Ubaydli Peter Boettke Brian C Albrecht |
| author_facet | Omar Al-Ubaydli Peter Boettke Brian C Albrecht |
| author_sort | Omar Al-Ubaydli |
| collection | DOAJ |
| description | Economists well understand that the work of Friedrich Hayek contains important theoretical insights. It is less often acknowledged that his work contains testable predictions about the nature of market processes. Vernon Smith termed the most important one the 'Hayek hypothesis': that gains from trade can be realized in the presence of diffuse, decentralized information, and in the absence of price-taking behavior and centralized market direction. Vernon Smith tested this prediction by surveying data on laboratory experimental markets and found strong support. We extend Smith's work first by showing how subsequent theoretical advances provide a theoretical foundation for the Hayek Hypothesis. We then test the hypothesis using recent field experimental market data. Using field experiments allows us to test several other predictions from Hayek, such as that market experience increases the realized gains from trade. Generally speaking, we find support for Hayek's theories. |
| first_indexed | 2024-12-12T00:41:15Z |
| format | Article |
| id | doaj.art-861865c0ce2945b8bbd32f482d8b6e33 |
| institution | Directory Open Access Journal |
| issn | 1932-6203 |
| language | English |
| last_indexed | 2024-12-12T00:41:15Z |
| publishDate | 2022-01-01 |
| publisher | Public Library of Science (PLoS) |
| record_format | Article |
| series | PLoS ONE |
| spelling | doaj.art-861865c0ce2945b8bbd32f482d8b6e332022-12-22T00:44:14ZengPublic Library of Science (PLoS)PLoS ONE1932-62032022-01-01177e027048910.1371/journal.pone.0270489Testing the Hayek hypothesis: Recent theoretical and experimental evidence.Omar Al-UbaydliPeter BoettkeBrian C AlbrechtEconomists well understand that the work of Friedrich Hayek contains important theoretical insights. It is less often acknowledged that his work contains testable predictions about the nature of market processes. Vernon Smith termed the most important one the 'Hayek hypothesis': that gains from trade can be realized in the presence of diffuse, decentralized information, and in the absence of price-taking behavior and centralized market direction. Vernon Smith tested this prediction by surveying data on laboratory experimental markets and found strong support. We extend Smith's work first by showing how subsequent theoretical advances provide a theoretical foundation for the Hayek Hypothesis. We then test the hypothesis using recent field experimental market data. Using field experiments allows us to test several other predictions from Hayek, such as that market experience increases the realized gains from trade. Generally speaking, we find support for Hayek's theories.https://doi.org/10.1371/journal.pone.0270489 |
| spellingShingle | Omar Al-Ubaydli Peter Boettke Brian C Albrecht Testing the Hayek hypothesis: Recent theoretical and experimental evidence. PLoS ONE |
| title | Testing the Hayek hypothesis: Recent theoretical and experimental evidence. |
| title_full | Testing the Hayek hypothesis: Recent theoretical and experimental evidence. |
| title_fullStr | Testing the Hayek hypothesis: Recent theoretical and experimental evidence. |
| title_full_unstemmed | Testing the Hayek hypothesis: Recent theoretical and experimental evidence. |
| title_short | Testing the Hayek hypothesis: Recent theoretical and experimental evidence. |
| title_sort | testing the hayek hypothesis recent theoretical and experimental evidence |
| url | https://doi.org/10.1371/journal.pone.0270489 |
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