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Posted - Offer Markets In Near Continuous Time: an Experimental Investigation

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Author Info
Douglas D. Davis () (Department of Economics, VCU School of Business)
Oleg Korenok () (Department of Economics, Virginia Commonwealth University)

Additional information is available for the following registered author(s):

Abstract

This paper reports an experiment conducted to evaluate a ‘near continuous’ variant of the posted-offer trading institution, where the number of periods in a market session is increased by reducing sharply each period’s maximum length. Experimental results suggest that although decisions in time-truncated periods are not equivalent to periods of longer duration, extensive repetition improves considerably the drawing power of equilibrium predictions in some challenging environments. Nevertheless, significant deviations remain in the near continuous framework. We also observe that the extra data collected in the near continuous framework allows new insights into price convergence and price signaling.

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File URL: http://www.people.vcu.edu/%7Edddavis/papers/MS8733_FINAL.pdf
File Format: application/pdf
File Function: Final version, 2007
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Publisher Info
Paper provided by VCU School of Business, Department of Economics in its series Working Papers with number 0504.

Download reference. The following formats are available: HTML, plain text, BibTeX, RIS (EndNote), ReDIF
Length: 54 pages
Date of creation: Nov 2005
Date of revision: 2007
Publication status: Forthcoming in Economic Inquiry
Handle: RePEc:vcu:wpaper:0504

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Postal: Box 844000, Richmond, VA 23284-4000
Phone: 804/828-1717
Web page: http://www.bus.vcu.edu/economics/
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For technical questions regarding this item, or to correct its listing, contact: (Oleg Korenok).

Related research
Keywords: experiment monopoly pricing price signaling

Other versions of this item:

Find related papers by JEL classification:
C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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References listed on IDEAS
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.:
  1. Cary A. Deck & Bart J. Wilson, 2003. "Automated Pricing Rules in Electronic Posted Offer Markets," Economic Inquiry, Oxford University Press, vol. 41(2), pages 208-223, April. [Downloadable!] (restricted)
  2. Ketcham, Jon & Smith, Vernon L & Williams, Arlington W, 1984. "A Comparison of Posted-Offer and Double-Auction Pricing Institutions," Review of Economic Studies, Blackwell Publishing, vol. 51(4), pages 595-614, October. [Downloadable!] (restricted)
  3. Davis, Michael C & Hamilton, James D, 2004. "Why Are Prices Sticky? The Dynamics of Wholesale Gasoline Prices," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 36(1), pages 17-37, February.
    Other versions:
  4. Alger, Dan, 1987. "Laboratory Tests of Equilibrium Predictions with Disequilibrium Data," Review of Economic Studies, Blackwell Publishing, vol. 54(1), pages 105-45, January. [Downloadable!] (restricted)
  5. Douglas D. Davis & Charles A. Holt, 1996. "Price rigidities and institutional variations in markets with posted prices (*)," Economic Theory, Springer, vol. 9(1), pages 63-80.
  6. Davis, Douglas D. & Williams, Arlington W., 1997. "The effects of nonstationarities on performance in call markets," Journal of Economic Behavior & Organization, Elsevier, vol. 32(1), pages 39-54, January. [Downloadable!] (restricted)
  7. Edward L. Millner & Michael D. Pratt & Robert J. Reilly, 1990. "Contestability in Real-Time Experimental Flow Markets," RAND Journal of Economics, The RAND Corporation, vol. 21(4), pages 584-599, Winter. [Downloadable!] (restricted)
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Cited by:
(explanations, 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.)

  1. Douglas D. Davis, 2006. "Pure Numbers Effects, Market Power, and Tacit Collusion in Posted Offer Markets," Working Papers 0603, VCU School of Business, Department of Economics, revised Dec 2007. [Downloadable!]
  2. Douglas D. Davis & Korenok Oleg & Robert Reilly, 2007. "Re-matching, Information and Sequencing Effects in Posted Offer Markets," Working Papers 0701, VCU School of Business, Department of Economics, revised Oct 2007. [Downloadable!]
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