Fairness And Short Run Price Adjustment In Posted Offer Markets
AbstractQuestionnaire studies show that perceptions of fairness cause people to resist price increases following abrupt changes in conditions with no cost justification. We examine this hypothesis in posted-offer markets extending previous work. Consistent with the hypothesis, in the profit disclosure (fairness) treatment prices are initially below those in the cost and the no disclosure treatments. Over time prices converge in all treatments to the competitive surplus maximizing equilibrium. Fairness is thus interpreted as being a result of expectations that are not sustainable. Expectations adapt as the market converges to the predicted competitive equilibrium.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Universidad Carlos III, Departamento de Economía in its series Economics Working Papers with number we036024.
Date of creation: Nov 2003
Date of revision:
Other versions of this item:
- Kujal, Praveen & Smith, Vernon L., 2008. "Fairness and Short Run Price Adjustment in Posted Offer Markets," Handbook of Experimental Economics Results, Elsevier.
- Kujal, Praveen & Smith, Vernon L., . "Fairness and short run price adjustment in posted offer markets," Open Access publications from Universidad Carlos III de Madrid info:hdl:10016/314, Universidad Carlos III de Madrid.
- NEP-ALL-2003-11-16 (All new papers)
- NEP-CBE-2003-11-16 (Cognitive & Behavioural Economics)
- NEP-EXP-2003-11-16 (Experimental Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Franciosi, Robert, et al, 1995. "Fairness: Effect on Temporary and Equilibrium Prices in Posted-Offer Markets," Economic Journal, Royal Economic Society, vol. 105(431), pages 938-50, July.
- Ketcham, Jon & Smith, Vernon L & Williams, Arlington W, 1984. "A Comparison of Posted-Offer and Double-Auction Pricing Institutions," Review of Economic Studies, Wiley Blackwell, vol. 51(4), pages 595-614, October.
- Binmore, Ken, et al, 1993. "Focal Points and Bargaining," International Journal of Game Theory, Springer, vol. 22(4), pages 381-409.
- Franciosi, Robert & Kujal, Praveen & Deng, G. & Michelitsch, R. & Smith, V., 2000. "Fairness: Effect on Temporary and Equilibrium Prices in Posted Offer Markets," Open Access publications from Universidad Carlos III de Madrid info:hdl:10016/5355, Universidad Carlos III de Madrid.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.