Markets versus Negotiations: An Experimental Investigation

Kugler, Tamar, Neeman, Zvika and Vulkan, Nir (2006) Markets versus Negotiations: An Experimental Investigation. Games and Economic Behaviour, 56 (1). pp. 121-134.

Abstract

We consider the consequences of competition between two types of experimental exchange mechanisms, a “decentralized bargaining” market, and a “centralized” market. It is shown that decentralized bargaining is subject to a process of “unraveling” in which relatively high value traders (buyers with a high willingness to pay and sellers with low costs) continuously find trading in the centralized markets more attractive until few opportunities for mutually beneficial trade remain outside the centralized marketplace.

Item Type: Article
Keywords: Centralized markets; Decentralized markets; Decentralized bargaining; Market design; Market formation; finance
Subject(s): Complexity
Entrepreneurship
Finance
Centre: CABDyN Complexity Centre
Entrepreneurship Centre
Date Deposited: 21 Feb 2012 20:50
Last Modified: 27 Feb 2017 14:12
Funders: N/A
URI: http://eureka.sbs.ox.ac.uk/id/eprint/2967

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