Paper #351

Title:

Credit cycles in theory and experiment

Authors:

Antoni Bosch-Domènech and María Sáez

Date:

January 1999

Abstract:

We test in the laboratory the potential of evolutionary dynamics as predictor of actual behavior. To this end, we propose an asymmetric game -which we interpret as a borrowerlender relation-, study its evolutionary dynamics in a random matching set-up, and tests its predictions. The model provides conditions for the existence of credit markets and credit cycles. The theoretical predictions seem to be good approximations of the experimental results.

Keywords:

Cycles, evolutionary dynamics, games, experiments, Leex

JEL codes:

C7, C9, E3

Area of Research:

Behavioral and Experimental Economics

Published in:

Games and Economic Behavior, 36, (2001), pp. 105-137

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