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The influence of seller learning and time constraints on sequential bargaining in an artificial perishable goods market

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  • Sonia Moulet

    ()
    (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - Université de la Méditerranée - Aix-Marseille II - Université Paul Cézanne - Aix-Marseille III - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - CNRS : UMR6579)

  • Juliette Rouchier

    ()
    (GREQAM - Groupement de Recherche en Économie Quantitative d'Aix-Marseille - Université de la Méditerranée - Aix-Marseille II - Université Paul Cézanne - Aix-Marseille III - Ecole des Hautes Etudes en Sciences Sociales (EHESS) - CNRS : UMR6579)

Abstract

This paper investigates the formation of prices in a perishable goods market where agents bargain repeatedly through pair-wise interactions. After extensive field observations, we chose to focus on two aspects that seem important to actors of this market : the passage of time and update in judgement when gathering information. The main feature of the market is that a seller bargaining with a buyer has incomplete information about buyer's willingness to pay and is not sure how her trading partner will evaluate an offer or compare it with other options. On the other hand, buyers have limited time to look for good sand cannot meet all possible sellers before making a decision. Hence agents cannot calculate the best price to offer but receive information through limited interactions, and use this information to choose their actions. An agent-based model was built to represent a frame work that mimics the observed market institution and where agent's possible behaviours and learning was made as consistent as possible with gathered data. Simulations were run, first for sensitivity analysis concerning main parameters, then to test the dependence of agents'learning to (a) the time buyers can spend on the market and (b) the frequency of update in learning by sellers. To validate the model, features produced by the simulated market are compared to the stylized facts gathered for negotiation about four goods. We reproduce the main features of the data on the dynamics of offers, transaction prices and agents'behavior during the bargaining phases.

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Bibliographic Info

Paper provided by HAL in its series Working Papers with number halshs-00353505.

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Date of creation: 15 Jan 2009
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Handle: RePEc:hal:wpaper:halshs-00353505

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Related research

Keywords: agent-based model; bargaining; perishable goods; pair-wise interac-tion; decentralized market;

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References

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  1. Dan Ashlock & Mark D. Smucker & E. Ann Stanley & Leigh Tesfatsion, 1995. "Preferential Partner Selection in an Evolutionary Study of Prisoner's Dilemma," Game Theory and Information 9501002, EconWPA, revised 20 Jan 1995.
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  3. Hommes, Cars H., 2006. "Heterogeneous Agent Models in Economics and Finance," Handbook of Computational Economics, in: Leigh Tesfatsion & Kenneth L. Judd (ed.), Handbook of Computational Economics, edition 1, volume 2, chapter 23, pages 1109-1186 Elsevier.
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  5. Abel, Andrew B, 1985. "Inventories, Stock-Outs and Production Smoothing," Review of Economic Studies, Wiley Blackwell, vol. 52(2), pages 283-93, April.
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  7. Anonymous, 1994. "Research Updates," Journal of Food Distribution Research, Food Distribution Research Society, vol. 25(1), February.
  8. Kirman, Alan P. & Vriend, Nicolaas J., 2001. "Evolving market structure: An ACE model of price dispersion and loyalty," Journal of Economic Dynamics and Control, Elsevier, vol. 25(3-4), pages 459-502, March.
  9. Joshua M. Epstein & Robert L. Axtell, 1996. "Growing Artificial Societies: Social Science from the Bottom Up," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262550253, December.
  10. Weisbuch, G. & Kirman, A. & Herreiner, D., 1998. "Market Organisation and Trading Relationships," G.R.E.Q.A.M. 98a32, Universite Aix-Marseille III.
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Cited by:
  1. Lamieri, Marco & Bertacchini, Enrico, 2006. "What if Hayek goes shopping in the bazaar?," MPRA Paper 367, University Library of Munich, Germany, revised 21 Jun 2006.
  2. Renaud Bourlès & Juliette Rouchier, 2012. "Evolving Informal Risk-Sharing Cooperatives and Other-Regarding Preferences," Working Papers halshs-00793706, HAL.
  3. Joshua Sherman & Avi Weiss, 2012. "Price Response, Asymmetric Information, and Competition," Working Papers 2012-13, Department of Economics, Bar-Ilan University.
  4. Ahmet Ozkardas & Agnieszka Rusinowska, 2013. "An application of wage bargaining to price negotiation with discount factors varying in time," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00881151, HAL.
  5. Juliette Rouchier, 2013. "The Interest of Having Loyal Buyers in a Perishable Market," Computational Economics, Society for Computational Economics, vol. 41(2), pages 151-170, February.

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