Title

Sunspots in the Laboratory

Author Info

John Duffy, University of Pittsburgh
Eric O'N. Fisher, The Ohio State UniversityFollow

Recommended Citation

Published in The American Economic Review, Volume 95, Issue 3, June 1, 2005, pages 510-529.

NOTE: At the time of publication, the author Eric Fisher was not yet affiliated with Cal Poly.

The definitive version is available at https://doi.org/10.1257/0002828054201350.

Abstract

We show that extrinsic or non-fundamental uncertainty influences markets in a controlled environment. This work provides the first direct evidence of sunspot equilibria. These equilibria require a common understanding of the semantics of the sunspot variable, and they appear to be sensitive to the flow of information. Extrinsic uncertainty matters when information flows slowly, as in a call market, but it need not matter when information flows quickly, as in a double auction where infra-marginal bids and offers are observable.

Disciplines

Economics

Copyright

2005 American Economic Association.