Cyclical Double-Auction Markets with and Without Speculators

Abstract

This study reports the results of 18 computerized 'double-auction' market experiments characterized by cycling excess demand. Two such market designs are studied: one with stationary supply and cycling demand, the other with cycling supply and demand. Data from a series of control experiments under conditions of intertemporal isolation (autarky) are compared with data from experiments where the two cyclical market phases are linked by a subset of agents (speculators). Allowing intertemporal speculation is found to be a significant treatment variable in both market designs; however, price convergence patterns are not robust with respect to the design change.