ABSTRACT
It is my intention that this review of “Rational Expectations and the Aggregation of Diverse Information in Laboratory Markets” by Charles R. Plott and Shyam Sunder will do more than merely summarize the results of the paper, although I do that, in addition to outlining the basic features of the experimental design. Beyond these basic points, I review previous work in asset-market experiments, especially a related paper by the same authors from 1982, to place the results of this paper in the context of an exceptionally fruitful research program undertaken by many investigators, particularly including the authors. In doing so, I hope to demonstrate why this paper has evolved to the status of “classic” and is suitable for inclusion in this volume. The core of the contribution is the transition from investigating asset markets disseminating information to asset markets aggregating information. I emphasize the theory-grounded nature of the authors’ inquiry, and show that the paper influenced other work long after its publication.
