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Does Learning Lead to Coordination in Market Clearing Institutions?

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Abstract

This paper analyzes the question of whether traders learn to coordinate on a trading institution that guarantees market clearing, or whether other market institutions can survive in the long run. While we find that the market clearing institution is indeed always stable under a general class of learning dynamics, it turns out that also other, non-market clearing institutions are stable. Hence, in the long run traders may fail to coordinate exclusively in market clearing institutions.

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File URL: http://homepage.univie.ac.at/Papers.Econ/RePEc/vie/viennp/vie0319.pdf
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Bibliographic Info

Paper provided by University of Vienna, Department of Economics in its series Vienna Economics Papers with number 0319.

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Date of creation: Dec 2003
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Handle: RePEc:vie:viennp:0319

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Web page: http://www.univie.ac.at/vwl

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  1. Jackson, Matthew O., 1998. "The Evolution of Social and Economic Networks," Working Papers 1044, California Institute of Technology, Division of the Humanities and Social Sciences.
  2. Michel BenaÔm & J–rgen W. Weibull, 2003. "Deterministic Approximation of Stochastic Evolution in Games," Econometrica, Econometric Society, vol. 71(3), pages 873-903, 05.
  3. Drew Fudenberg & David K. Levine, 1998. "Learning in Games," Levine's Working Paper Archive 2222, David K. Levine.
  4. Kirchsteiger, G. & Niederle, M. & Potters, J.J.M., 2005. "Endogenizing market institutions: An experimental approach," Open Access publications from Tilburg University urn:nbn:nl:ui:12-171357, Tilburg University.
  5. Alvin E. Roth & Axel Ockenfels, . "Last-Minute Bidding and the Rules for Ending Second-Price Auctions: Evidence from eBay and Amazon Auctions on the Internet," Papers on Strategic Interaction 2002-32, Max Planck Institute of Economics, Strategic Interaction Group.
  6. Ellison, Glenn, 2000. "Basins of Attraction, Long-Run Stochastic Stability, and the Speed of Step-by-Step Evolution," Review of Economic Studies, Wiley Blackwell, vol. 67(1), pages 17-45, January.
  7. Lawrence M. Ausubel & Peter Cramton, 1995. "Demand Reduction and Inefficiency in Multi-Unit Auctions," Papers of Peter Cramton 98wpdr, University of Maryland, Department of Economics - Peter Cramton, revised 22 Jul 2002.
  8. Rachel E. Kranton & Deborah F. Minehart, 2001. "A Theory of Buyer-Seller Networks," American Economic Review, American Economic Association, vol. 91(3), pages 485-508, June.
  9. Klemperer, P., 1999. "Auction Theory: a Guide to the Literature," Economics Papers 1999-w12, Economics Group, Nuffield College, University of Oxford.
  10. Friedman, James W. & Mezzetti, Claudio, 2001. "Learning in Games by Random Sampling," Journal of Economic Theory, Elsevier, vol. 98(1), pages 55-84, May.
  11. Young, H Peyton, 1993. "The Evolution of Conventions," Econometrica, Econometric Society, vol. 61(1), pages 57-84, January.
  12. Samuelson Larry, 1994. "Stochastic Stability in Games with Alternative Best Replies," Journal of Economic Theory, Elsevier, vol. 64(1), pages 35-65, October.
  13. Kandori Michihiro & Rob Rafael, 1995. "Evolution of Equilibria in the Long Run: A General Theory and Applications," Journal of Economic Theory, Elsevier, vol. 65(2), pages 383-414, April.
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Cited by:
  1. Carlos Alós-Ferrer & Georg Kirchsteiger & Markus Walzl, 2007. "On the Evolution of Market Institutions: The Platform Design Paradox," CESifo Working Paper Series 2012, CESifo Group Munich.
  2. Alos-Ferrer, Carlos & Kirchsteiger, Georg, 2006. "General Equilibrium and the Emergence of (Non) Market Clearing Trading Institutions," CEPR Discussion Papers 5795, C.E.P.R. Discussion Papers.
  3. Schram, Arthur & Brandts, Jordi & Gërxhani, Klarita, 2010. "Information, bilateral negotiations, and worker recruitment," European Economic Review, Elsevier, vol. 54(8), pages 1035-1058, November.
  4. Anke Gerber & Marc Oliver Bettzüge, . "Evolutionary Choice of Markets," IEW - Working Papers 109, Institute for Empirical Research in Economics - University of Zurich.
  5. Arthur Schram & Jordi Brandts & Klarita Gërxhani, 2007. "Information Networks and Worker Recruitment," Working Papers 316, Barcelona Graduate School of Economics.
  6. Bochet, Olivier & Storcken, Ton, 2006. "Maximal Domains for Strategy-Proof or Maskin Monotonic Choice Rules," Research Memorandum 003, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).

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