The experimental work demonstrates that markets have the capacity to collect information through a process of equilibration and that fact suggests the feasibility of creating a system of markets that have only a purpose of gathering information. The laboratory work suggests that theory and...

This paper investigates the capacity investment decision of a supplier who solicits private forecast information from a manufacturer. To ensure abundant supply, the manufacturer has an incentive to inflate her forecast in a costless, non-binding, and non-verifiable type of communication known as...