Markets versus negotiations: An experimental investigation

Tamar Kugler*, Zvika Neeman, Nir Vulkan

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

15 Scopus citations

Abstract

We consider the consequences of competition between two types of experimental exchange mechanisms, a "decentralized bargaining" market, and a "centralized" market. It is shown that decentralized bargaining is subject to a process of "unraveling" in which relatively high value traders (buyers with a high willingness to pay and sellers with low costs) continuously find trading in the centralized markets more attractive until few opportunities for mutually beneficial trade remain outside the centralized marketplace.

Original languageEnglish
Pages (from-to)121-134
Number of pages14
JournalGames and Economic Behavior
Volume56
Issue number1
DOIs
StatePublished - Jul 2006
Externally publishedYes

Funding

FundersFunder number
Aims Byudks foundation

    Keywords

    • Centralized markets
    • Decentralized bargaining
    • Decentralized markets
    • Market design
    • Market formation

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