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Markets versus negotiations: An experimental investigation

Listed author(s):
  • Kugler, Tamar
  • Neeman, Zvika
  • Vulkan, Nir

We consider the consequences of competition between two types of experimental exchange mechanisms, a “decentralized bargaining” market, and a “centralized” market. The experiment demonstrates that decentralized bargaining is subject to a process of unraveling in which relatively weak traders (buyers with high willingness to pay and sellers with low costs) continuously find trading in the centralized market more attractive until almost no opportunities for mutually beneficial trade remain outside the centralized marketplace.

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File URL: http://www.sciencedirect.com/science/article/pii/S0899-8256(05)00076-X
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Article provided by Elsevier in its journal Games and Economic Behavior.

Volume (Year): 56 (2006)
Issue (Month): 1 (July)
Pages: 121-134

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Handle: RePEc:eee:gamebe:v:56:y:2006:i:1:p:121-134
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622836

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