Neoclassical Supply and Demand, Experiments, and the Classical Theory of Price Formation

Neoclassical price theory was founded on axioms of price-taking behavior and the law one in a market, inconsistent with endogenous discovery markets. Classical economists including Adam Smith narrated process based buyer seller reservation values their motivation to buy low sell high; classical sketch formation offers quite fruitful foundation for modern discovery, supplied below. Market experiments, private distributed using rules governing open-outcry double auctions, converged endogenously, three four periods repeat interaction, an efficient outcome. These observations contradicted widely believed thought taught necessity perfect information, large numbers, behavior. However, these results were consistent old conception emerging from collective interaction traders. Aggregation constitute essential functions We explore divergence neoclassical scholars this tradition. Revealingly, describing microdynamics market formation, prominent utilitarians such as Marshall, his description “corn-market county town,” Böhm-Bawerk farmers’ horse reverted reservation-value framework.