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Posted Offer Markets In Near‐Continuous Time: An Experimental Investigation

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  • DOUGLAS D. DAVIS
  • OLEG KORENOK

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 allow new insights into price convergence and signaling. (JEL C92, L12, L11)

Suggested Citation

  • Douglas D. Davis & Oleg Korenok, 2009. "Posted Offer Markets In Near‐Continuous Time: An Experimental Investigation," Economic Inquiry, Western Economic Association International, vol. 47(3), pages 449-466, July.
  • Handle: RePEc:bla:ecinqu:v:47:y:2009:i:3:p:449-466
    DOI: 10.1111/j.1465-7295.2007.00109.x
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    Cited by:

    1. Davis, Douglas, 2009. "Pure numbers effects, market power, and tacit collusion in posted offer markets," Journal of Economic Behavior & Organization, Elsevier, vol. 72(1), pages 475-488, October.
    2. Voslinsky, Alisa & Azar, Ofer H., 2021. "Incentives in experimental economics," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 93(C).
    3. Douglas Davis & Oleg Korenok & Robert Reilly, 2009. "Re-matching, information and sequencing effects in posted offer markets," Experimental Economics, Springer;Economic Science Association, vol. 12(1), pages 65-86, March.
    4. Sara Ellison & Christopher M. Snyder, 2014. "An Empirical Study of Pricing Strategies in an Online Market with High-Frequency Price Information," CESifo Working Paper Series 4655, CESifo.
    5. Douglas Davis & Oleg Korenok & Robert Reilly, 2010. "Cooperation without coordination: signaling, types and tacit collusion in laboratory oligopolies," Experimental Economics, Springer;Economic Science Association, vol. 13(1), pages 45-65, March.
    6. Deck, Cary A. & Wilson, Bart J., 2008. "Experimental gasoline markets," Journal of Economic Behavior & Organization, Elsevier, vol. 67(1), pages 134-149, July.
    7. Jean Paul Rabanal & Olga A. Rabanal, 2015. "A Simulation on the Evolution of Markets: Call Market, Decentralized and Posted Offer," Working Papers 34, Peruvian Economic Association.
    8. Cary Deck & Bart J. Wilson, 2020. "Auctions in near-continuous time," Experimental Economics, Springer;Economic Science Association, vol. 23(1), pages 110-126, March.
    9. Davis, Douglas & Korenok, Oleg, 2011. "Nominal shocks in monopolistically competitive markets: An experiment," Journal of Monetary Economics, Elsevier, vol. 58(6), pages 578-589.
    10. Deck, Cary & Gu, Jingping, 2012. "Price increasing competition? Experimental evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 84(3), pages 730-740.
    11. Olga A. Rud & Jean Paul Rabanal, 2018. "Evolution of markets: a simulation with centralized, decentralized and posted offer formats," Journal of Evolutionary Economics, Springer, vol. 28(3), pages 667-689, August.
    12. Anil Caliskan & David Porter & Stephen Rassenti & Vernon L. Smith & Bart J. Wilson, 2007. "Exclusionary Bundling and the Effects of a Competitive Fringe," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 163(1), pages 109-132, March.

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    More about this item

    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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