Experiments on market aggregation of decentralized information.

Jason asks,"Has anyone ever done empirical, controlled, double-blind, and otherwise scientific tests to examine how, how well, and why markets are able to aggregate knowledge?"

The answer is, yes, many economists have done such experiments, in a variety of interesting and cogent forms. Vernon Smith won a Nobel Prize for his leadership of this experimentation program over the past several decades. The experiments, by and large, demonstrate what others have concluded on the basis of economic theory and historical observation: markets work. Indeed, the amazing thing is that in the experiments the markets often converge very quickly to the competitive equilibrium. Whudda thunk?