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Structure, behavior, and market power in an evolutionary labor market with adaptive search

  • Tesfatsion, Leigh

This study undertakes a systematic experimental investigation of the relationship between market power and labor market structure (concentration and capacity conditions) when workers and employers preferentially match based on past worksite experiences. For each tested market structure, workers and employers repeatedly seek preferred worksite partners based on continually updated expected utility, engage in efficiency-wage worksite interactions modeled as prisoner's dilemma games, and evolve their worksite behaviors over time. A key finding is the presence of strong learning and network effects. Each tested market structure maps into a "spectral" distribution of observed interaction networks exhibiting one dominant attractor (frequent network pattern) with one or two weaker attractors (less frequent network patterns). Market structure is strongly predictive for the relative market power of workers and employers across all network attractors, but the magnitudes of the market power levels attained by workers and employers vary widely across the network attractors. Annotated pointers to related work can be accessed here: http://www.econ.iastate.edu/tesfatsi/tnghome.htm

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File URL: http://www.sciencedirect.com/science/article/B6V85-419JHMW-6/2/fbae4596d745bc6f03c888152d5cfc3e
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Article provided by Elsevier in its journal Journal of Economic Dynamics and Control.

Volume (Year): 25 (2001)
Issue (Month): 3-4 (March)
Pages: 419-457

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Handle: RePEc:eee:dyncon:v:25:y:2001:i:3-4:p:419-457
Contact details of provider: Web page: http://www.elsevier.com/locate/jedc

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  1. Rubinstein, Ariel & Wolinsky, Asher, 1990. "Decentralized Trading, Strategic Behaviour and the Walrasian Outcome," Review of Economic Studies, Wiley Blackwell, vol. 57(1), pages 63-78, January.
  2. Leigh TESFATSION, 1995. "A Trade Network Game With Endogenous Partner Selection," Economic Report 36, Iowa State University Department of Economics.
  3. Bresnahan, Timothy F., 1989. "Empirical studies of industries with market power," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 2, chapter 17, pages 1011-1057 Elsevier.
  4. Tesfatsion, Leigh, 1998. "Preferential Partner Selection in Evolutionary Labor Markets: A Study in Agent-Based Computational Economics," Staff General Research Papers 2048, Iowa State University, Department of Economics.
  5. McFadzean, David & Tesfatsion, Leigh S., 1999. "A C++ Platform for the Evolution of Trade Networks," Staff General Research Papers 1639, Iowa State University, Department of Economics.
  6. Leigh TESFATSION, 1995. "How Economists Can Get Alife," Economic Report 37, Iowa State University Department of Economics.
  7. Ashlock, Daniel & Smucker, Mark D. & Stanley, E. Ann & Tesfatsion, Leigh S., 1996. "Preferential Partner Selection in an Evolutionary Study of Prisoner's Dilemma," Staff General Research Papers 1687, Iowa State University, Department of Economics.
  8. Joel L. Schrag, 1999. "First Impressions Matter: A Model Of Confirmatory Bias," The Quarterly Journal of Economics, MIT Press, vol. 114(1), pages 37-82, February.
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