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What if Hayek goes shopping in the bazaar?

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  • Lamieri, Marco
  • Bertacchini, Enrico

Abstract

The paper presents a comparative analysis of the peculiar institutional features of two retail markets: the middle eastern Bazaar and the western Mall (shopping center). We study the informational functions and performance of the different market institutions using an Agent Based Computational Economics (ACE) model under the assumption of behavioral learning by agents. Sellers decide which price setting strategy to adopt whereas buyers form their price beliefs exploring the market and decide which price to accept. The agents learn how to adapt and behave within the specific institutional framework to carry out their economic transactions, but market institutions, as mechanisms to coordinate information of market participants are expected to affect the price dynamics. The main area of interest concerns the question of whether the economic argument on the presumed underperformance of bazaar institutions respect to more competitive markets holds true or it is necessary a reassessment on it.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 367.

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Date of creation: 21 Jun 2006
Date of revision: 21 Jun 2006
Handle: RePEc:pra:mprapa:367

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Keywords: Agent's beliefs; learning; adaptive behavior; market institutions; price dynamics;

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  1. Sonia Moulet & Juliette Rouchier, 2009. "The influence of seller learning and time constraints on sequential bargaining in an artificial perishable goods market," Working Papers, HAL halshs-00353505, HAL.
  2. Michael Rothschild, 1974. "Searching for the Lowest Price When the Distribution of Prices Is Unknown: A Summary," NBER Chapters, National Bureau of Economic Research, Inc, in: Annals of Economic and Social Measurement, Volume 3, number 1, pages 293-294 National Bureau of Economic Research, Inc.
  3. Nigel Gilbert & Pietro Terna, 2000. "How to build and use agent-based models in social science," Mind and Society: Cognitive Studies in Economics and Social Sciences, Fondazione Rosselli, Fondazione Rosselli, vol. 1(1), pages 57-72, March.
  4. Pietro Terna, 1998. "Simulation Tools for Social Scientists: Building Agent Based Models with SWARM," Journal of Artificial Societies and Social Simulation, Journal of Artificial Societies and Social Simulation, Journal of Artificial Societies and Social Simulation, vol. 1(2), pages 4.
  5. Geertz, Clifford, 1978. "The Bazaar Economy: Information and Search in Peasant Marketing," American Economic Review, American Economic Association, American Economic Association, vol. 68(2), pages 28-32, May.
  6. Tesfatsion, Leigh S., 2002. "Agent-Based Computational Economics: Growing Economies from the Bottom Up," Staff General Research Papers, Iowa State University, Department of Economics 5075, Iowa State University, Department of Economics.
  7. George J. Stigler, 1961. "The Economics of Information," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 69, pages 213.
  8. Rothschild, Michael, 1974. "Searching for the Lowest Price When the Distribution of Prices Is Unknown," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 82(4), pages 689-711, July/Aug..
  9. 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, Elsevier, vol. 25(3-4), pages 459-502, March.
  10. Kranton, Rachel E, 1996. "Reciprocal Exchange: A Self-Sustaining System," American Economic Review, American Economic Association, American Economic Association, vol. 86(4), pages 830-51, September.
  11. Brenner, Thomas, 2002. "A Behavioural Learning Approach to the Dynamics of Prices," Computational Economics, Society for Computational Economics, Society for Computational Economics, vol. 19(1), pages 67-94, February.
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