From Non Market Attitudes to Market Behavior: Laboratory Market Experiments in Moscow, and the Hvatat Property of Human Behavior (1998)

This paper reports on laboratory market experiments that were conducted in Moscow&#13;\nduring the fall of 1992. Two broad concerns guided the design of the experiments. The&#13;\nfirst concern is the obvious cultural differences between people in Russia and those in the&#13;\nwest where traditional laboratory market experiments have been conducted. Most&#13;\neconomists who have conducted experiments would assume that cultural background&#13;\nwould not play a major part in the equilibration process, and that the law of supply and&#13;\ndemand would operate essentially the same in all cultures and at all times. As Russia is&#13;\nundergoing a dramatic social change and before an orientation to market attitudes&#13;\npermeates the society, a unique opportunity presented itself to test this assumption about&#13;\nthe universal nature of the laws of the market.&#13;\n&#13;\nIn the language of the experimenters, this first concern is whether or not some of the&#13;\nknown properties of markets that operate in western culture are robust to major changes&#13;\nin the culture of the subject population. The properties of markets that are of interest are&#13;\nthe fact of equilibration, the influence of price ceilings on equilibration and the influence&#13;\nof the asymmetries in the shapes of the demand and supply curves on the direction of&#13;\nconvergence to equilibrium. The second concern reflects a desire to explore some more&#13;\nrecently discovered aspects of market behavior. A transactions cost was added to the&#13;\nmarket and the question posed was whether or not the cost frustrated or biased&#13;\nequilibration (Jamison and Plott, 1997).&#13;\n&#13;\nThe results of the experiments were not as anticipated. The standard convergence process&#13;\nwas observed but when the data were applied to test the asymmetric rent hypothesis or&#13;\nthe hypothesis regarding the nonbinding price controls, some surprises surfaced. In&#13;\nparticular the data were not the same as had been observed in other experiments. This&#13;\nparadoxical failure of previous results to generalize prompted a detailed investigation into&#13;\nthe behavior of individuals in the experiments. The hope was to find the causes of the discrepancies. A special section of the paper is devoted to a conjecture that resulted from&#13;\nthe ex-post examination of the data and is offered as an explanation.&#13;\n&#13;\nThe paper is organized as follows. In the first section the purposes of the project are&#13;\noutlined in greater detail. The second section contains the experimental design,&#13;\nprocedures and parameters. The third section contains the predictions of alternative&#13;\nmodels as applied to the special case of the parameters of the experiments. The fourth&#13;\nsection contains the results of the experiments. The fifth section contains the post&#13;\nexperiment speculations about the possible explanations of the surprising dynamic&#13;\nbehavior. Here the idea of Hvatat, which means "to grab" in Russian, is introduced and&#13;\nexplored. The final section is a summary of conclusions.