IDEAS home Printed from https://ideas.repec.org/a/ags/jlaare/30793.html
   My bibliography  Save this article

Endogenous Choice Of Institution Under Supply And Demand Risks In Laboratory Forward And Spot Markets

Author

Listed:
  • Menkhaus, Dale J.
  • Bastian, Christopher T.
  • Phillips, Owen R.
  • O'Neill, Patrick D.

Abstract

Laboratory methods are used to investigate the impacts of supply and demand risks in a forward market on prices, quantities traded, and earnings when the choice of transacting in a forward or spot market is endogenous. Forward market activity dominates spot trading, with 80-90% of the trades taking place in the forward market regardless of how risk arises. Buyer earnings tend to be higher than earnings for sellers when there is risk. A correspondence exists between risk type and the relative increase in buyer earnings. Buyer earnings increase significantly when demand is random, and also when both supply and demand are random.

Suggested Citation

  • Menkhaus, Dale J. & Bastian, Christopher T. & Phillips, Owen R. & O'Neill, Patrick D., 1999. "Endogenous Choice Of Institution Under Supply And Demand Risks In Laboratory Forward And Spot Markets," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 24(2), pages 1-19, December.
    • Handle: RePEc:ags:jlaare:30793
    DOI: 10.22004/ag.econ.30793
    as

    Download full text from publisher

    File URL: https://ageconsearch.umn.edu/record/30793/files/24020553.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.22004/ag.econ.30793?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Boehlje, Michael, 1996. "Industrialization of Agriculture: What are the Implications?," Choices: The Magazine of Food, Farm, and Resource Issues, Agricultural and Applied Economics Association, vol. 11(01), pages 1-4.
    2. Mestelman, Stuart & Welland, Deborah & Welland, Douglas, 1987. "Advance production in posted offer markets," Journal of Economic Behavior & Organization, Elsevier, vol. 8(2), pages 249-264, June.
    3. Charles N. Noussair & Charles R. Plott & Raymond G. Riezman, 2013. "An Experimental Investigation of the Patterns of International Trade," World Scientific Book Chapters, in: Raymond Riezman (ed.), International Trade Agreements and Political Economy, chapter 17, pages 299-328, World Scientific Publishing Co. Pte. Ltd..
    4. Krogmeier, Joseph L. & Menkhaus, Dale J. & Phillips, Owen R. & Schmitz, John D., 1997. "An Experimental Economics Approach To Analyzing Price Discovery In Forward And Spot Markets," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 29(2), pages 1-10, December.
    5. Plott, Charles R, 1982. "Industrial Organization Theory and Experimental Economics," Journal of Economic Literature, American Economic Association, vol. 20(4), pages 1485-1527, December.
    6. Smith, Vernon L, 1982. "Microeconomic Systems as an Experimental Science," American Economic Review, American Economic Association, vol. 72(5), pages 923-955, December.
    7. Krogmeier, Joseph L. & Menkhaus, Dale J. & Phillips, Owen R. & Schmitz, John D., 1997. "An Experimental Economics Approach to Analyzing Price Discovery in Forward and Spot Markets," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 29(2), pages 327-336, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Maurice Doyon & Lota Tamini & Virginie Simard & Kent Messer & Harry M. Kaiser, 2006. "L'économie expérimentale pour l'analyse de modifications au système centralisé de vente du quota laitier au Québec," CIRANO Working Papers 2006s-23, CIRANO.
    2. Buccola, Steven T. & Durham, Catherine A. & Gopinath, Munisamy & Henderson, Erin, 2001. "Food Manufacturing Cooperatives' Overseas Business Portfolios," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 26(01), pages 1-18, July.
    3. Maurice Doyon & Virginie Simard & Kent D. Messer & Lota D. Tamini & Harry M. Kaiser, 2008. "An Experimental Analysis of Modifications to the Centralized Milk Quota Exchange System in Quebec," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 56(3), pages 295-312, September.
    4. Phillips, Owen R. & Menkhaus, Dale J., 2006. "The Culture of Private Negotiation: Price Drift in Bilateral Bargaining," 2006 Annual meeting, July 23-26, Long Beach, CA 21168, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Menkhaus, Dale J. & Bastian, Christopher T. & Phillips, Owen R. & O'Neill, Patrick D., 1999. "Supply And Demand Risks In Forward And Spot Markets: Implications For Agriculture," 1999 Annual Meeting, July 11-14, 1999, Fargo, ND 35693, Western Agricultural Economics Association.
    2. Menkhaus, Dale J. & Bastian, Christopher T. & Phillips, Owen R. & O'Neill, Patrick D., 2000. "Supply And Demand Risks In Laboratory Forward And Spot Markets: Implications For Agriculture," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 32(01), pages 1-15, April.
    3. Phillips, Owen R. & Menkhaus, Dale J., 2006. "The Culture of Private Negotiation: Price Drift in Bilateral Bargaining," 2006 Annual meeting, July 23-26, Long Beach, CA 21168, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    4. Phillips, Owen R. & Menkhaus, Dale J., 2001. "Random shocks in experimental spot and forward auction markets," The Quarterly Review of Economics and Finance, Elsevier, vol. 41(4), pages 545-560.
    5. Alessandra Casella & Aniol Llorente-Saguer & Thomas R. Palfrey, 2012. "Competitive Equilibrium in Markets for Votes," Journal of Political Economy, University of Chicago Press, vol. 120(4), pages 593-658.
    6. Engelmann, Dirk & Normann, Hans-Theo, 2007. "An experimental test of strategic trade policy," Journal of Economic Behavior & Organization, Elsevier, vol. 64(1), pages 144-156, September.
    7. Menkhaus, Dale J. & Yakunina, Alla V. & Phillips, Owen R., 2001. "Bilateral Trading And The Curse Of Knowledge: An Experimental Economics Study," 2001 Annual Meeting, July 8-11, 2001, Logan, Utah 36127, Western Agricultural Economics Association.
    8. Paul Brewer & Maria Huang & Brad Nelson & Charles Plott, 2002. "On the Behavioral Foundations of the Law of Supply and Demand: Human Convergence and Robot Randomness," Experimental Economics, Springer;Economic Science Association, vol. 5(3), pages 179-208, December.
    9. Patrick Harvey & W. David Walls, 2003. "Laboratory markets in counterfeit goods: Hong Kong versus Las Vegas," Applied Economics Letters, Taylor & Francis Journals, vol. 10(14), pages 883-887.
    10. W. Brooke Elliott & Brian T. Gale & Jessen L. Hobson, 2022. "The Joint Influence of Information Push and Value Relevance on Investor Judgments and Market Efficiency," Journal of Accounting Research, Wiley Blackwell, vol. 60(3), pages 1049-1083, June.
    11. Steven D. Levitt & John A. List, 2007. "Viewpoint: On the generalizability of lab behaviour to the field," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 40(2), pages 347-370, May.
    12. Christian Erik Kampmann & John D. Sterman, 2014. "Do markets mitigate misperceptions of feedback?," System Dynamics Review, System Dynamics Society, vol. 30(3), pages 123-160, July.
    13. Lange, Andreas & Ross, Johannes, 2024. "Internalizing match-dependent externalities," Journal of Economic Behavior & Organization, Elsevier, vol. 218(C), pages 356-378.
    14. Wheatley, W. Parker & Buhr, Brian L. & Dipietre, Dennis, 2001. "E-Commerce In Agriculture: Development, Strategy, And Market Implications," Staff Papers 13938, University of Minnesota, Department of Applied Economics.
    15. Francisco Alpízar & Till Requate & Albert Schram, 2004. "Collective versus Random Fining: An Experimental Study on Controlling Ambient Pollution," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 29(2), pages 231-252, October.
    16. Kirchsteiger, G. & Niederle, M. & Potters, J.J.M., 1998. "The Endogenous Evolution of Market Institutions : An Experimental Investigation," Other publications TiSEM 5655ebed-6950-4ab7-b671-b, Tilburg University, School of Economics and Management.
    17. Vernon L. Smith & Sabiou M. Inoua, 2019. "Classical Economics: Lost and Found," Working Papers 19-15, Chapman University, Economic Science Institute.
    18. Ortmann, Andreas, 2003. "Charles R. Plott's collected papers on the experimental foundations of economic and political science," Journal of Economic Psychology, Elsevier, vol. 24(4), pages 555-575, August.
    19. Leitner, Johannes & Leopold-Wildburger, Ulrike, 2011. "Experiments on forecasting behavior with several sources of information - A review of the literature," European Journal of Operational Research, Elsevier, vol. 213(3), pages 459-469, September.
    20. Sánchez, Isabel, 1991. "La provision voluntaria de bienes publicos: Resultados Experimentales," DE - Documentos de Trabajo. Economía. DE 3000, Universidad Carlos III de Madrid. Departamento de Economía.

    More about this item

    Keywords

    Demand and Price Analysis;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ags:jlaare:30793. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: AgEcon Search (email available below). General contact details of provider: https://edirc.repec.org/data/waeaaea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.