Skills in the Marketplace: Individual Characteristics and Bargaining Ability in a Field-Based Experiment
Classic economic theory predicts that markets will clear, leaving little or no gains from trade left on the table. Laboratory experiments have largely confirmed this, though the results of recent field experiments have been mixed, with some artefactual markets in developing countries performing relatively inefficiently. I create a realistic multi-round trading market in Uganda with market-experienced individuals to explore the efficiency of trading and test what individual traits predict market efficiency and bargaining success using a rich dataset on individual characteristics. In early rounds, market efficiency is low. By the final round, efficiency rates are closer to theory. I find that individual characteristics of the buyers and sellers strongly predict the level of efficiency within the individual rounds. Individual characteristics are also important for individual success and divide along bargaining power: for buyers, who by design have high market power, wealth and patience are positively and significantly correlated with rents; for sellers with low market power, education, anti-social behavior and aggression are positively and significantly associated with rents. The results of the bargaining game also correlate with wealth levels two years after the experiment, suggesting that market prowess predicts lifetime outcomes. The results add importance to the role of individual characteristics for individual and social efficiency outcomes.
|Date of creation:||2013|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://www.diw.de/en
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- S. Dellavigna., 2011.
"Psychology and Economics: Evidence from the Field,"
N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 5.
- Stefano DellaVigna, 2009. "Psychology and Economics: Evidence from the Field," Journal of Economic Literature, American Economic Association, vol. 47(2), pages 315-72, June.
- S. Dellavigna., 2011. "Psychology and Economics: Evidence from the Field," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 4.
- Glenn Harrison & John List, 2004.
Artefactual Field Experiments
00058, The Field Experiments Website.
- Ariel Rubinstein, 2010.
"Perfect Equilibrium in a Bargaining Model,"
Levine's Working Paper Archive
252, David K. Levine.
- John List, 2004.
"Testing neoclassical competitive theory in multi-lateral decentralized markets,"
Framed Field Experiments
00176, The Field Experiments Website.
- John A. List, 2004. "Testing Neoclassical Competitive Theory in Multilateral Decentralized Markets," Journal of Political Economy, University of Chicago Press, vol. 112(5), pages 1131-1156, October.
- Timothy Bates, 1990. "Self-Employment Trends Among Mexican Americans," Working Papers 90-9, Center for Economic Studies, U.S. Census Bureau.
- M. Magnusson & B. Wydick, 2002. "How Efficient are Africa's Emerging Stock Markets?," Journal of Development Studies, Taylor & Francis Journals, vol. 38(4), pages 141-156.
- Daniel J. Benjamin & Sebastian A. Brown & Jesse M. Shapiro, 2013.
"Who Is ‘Behavioral’? Cognitive Ability And Anomalous Preferences,"
Journal of the European Economic Association,
European Economic Association, vol. 11(6), pages 1231-1255, December.
- Daniel J. Benjamin & Sebastian A. Brown & Jesse M. Shapiro, 2006. "Who is “Behavioral”? Cognitive Ability and Anomalous Preferences," Levine's Working Paper Archive 122247000000001334, David K. Levine.
- Josh Lerner & Antoinette Schoar, 2010. "International Differences in Entrepreneurship," NBER Books, National Bureau of Economic Research, Inc, number lern08-2, 07.
- Nick Bloom & John Van Reenen, 2006.
"Measuring and Explaining Management Practices Across Firms and Countries,"
CEP Discussion Papers
dp0716, Centre for Economic Performance, LSE.
- Nicholas Bloom & John Van Reenen, 2007. "Measuring and Explaining Management Practices Across Firms and Countries," The Quarterly Journal of Economics, MIT Press, vol. 122(4), pages 1351-1408, November.
- Bloom, Nicholas & Van Reenen, John, 2006. "Measuring and Explaining Management Practices Across Firms and Countries," CEPR Discussion Papers 5581, C.E.P.R. Discussion Papers.
- Nick Bloom & John Van Reenen, 2006. "Measuring and explaining management practices across firms and countries," LSE Research Online Documents on Economics 733, London School of Economics and Political Science, LSE Library.
- Nick Bloom & John Van Reenen, 2006. "Measuring and Explaining Management Practices Across Firms and Countries," NBER Working Papers 12216, National Bureau of Economic Research, Inc.
- Marco Casari & John C. Ham & John H. Kagel, 2005.
"Selection bias, demographic effects, and ability effects in common value auction experiments,"
213, Federal Reserve Bank of New York.
- Marco Casari & John C. Ham & John H. Kagel, 2007. "Selection Bias, Demographic Effects, and Ability Effects in Common Value Auction Experiments," American Economic Review, American Economic Association, vol. 97(4), pages 1278-1304, September.
- Garvin, Susan & Kagel, John H., 1994. "Learning in common value auctions: Some initial observations," Journal of Economic Behavior & Organization, Elsevier, vol. 25(3), pages 351-372, December.
- Ham, John C. & Kagel, John H., 2006. "Gender effects in private value auctions," Economics Letters, Elsevier, vol. 92(3), pages 375-382, September.
- Josh Lerner & Antoinette Schoar, 2010. "Introduction to "International Differences in Entrepreneurship"," NBER Chapters, in: International Differences in Entrepreneurship, pages 1-13 National Bureau of Economic Research, Inc.
- Fama, Eugene F, 1970. "Efficient Capital Markets: A Review of Theory and Empirical Work," Journal of Finance, American Finance Association, vol. 25(2), pages 383-417, May.
When requesting a correction, please mention this item's handle: RePEc:diw:diwwpp:dp1326. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Bibliothek)
If references are entirely missing, you can add them using this form.