Markets versus negotiations: An experimental investigation

Tamar Kugler; Zvika Neeman; Nir Vulkan

doi:10.1016/j.geb.2005.06.003

Markets versus negotiations: An experimental investigation

Tamar Kugler, Zvika Neeman, Nir Vulkan

Research output: Contribution to journal › Article › peer-review

16 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 language	English (US)
Pages (from-to)	121-134
Number of pages	14
Journal	Games and Economic Behavior
Volume	56
Issue number	1
DOIs	https://doi.org/10.1016/j.geb.2005.06.003
State	Published - Jul 2006

Keywords

Centralized markets
Decentralized bargaining
Decentralized markets
Market design
Market formation

ASJC Scopus subject areas

Finance
Economics and Econometrics

Access to Document

10.1016/j.geb.2005.06.003

Cite this

@article{f276ad7bafdd4de89126e15d1f9bdd79,

title = "Markets versus negotiations: An experimental investigation",

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.",

keywords = "Centralized markets, Decentralized bargaining, Decentralized markets, Market design, Market formation",

author = "Tamar Kugler and Zvika Neeman and Nir Vulkan",

note = "Funding Information: We are grateful for the suggestions made by Gary Bornstein, Itzhak Gilboa, Daniele Paserman, Marc Rysman, and seminar audiences at the Hebrew University, and at the ESA Meeting in Strasbourg. An associate editor and two anonymous referees provided useful comments. Financial support from the Aims Byudks foundation is gratefully acknowledged.",

year = "2006",

month = jul,

doi = "10.1016/j.geb.2005.06.003",

language = "English (US)",

volume = "56",

pages = "121--134",

journal = "Games and Economic Behavior",

issn = "0899-8256",

publisher = "Academic Press Inc.",

number = "1",

}

TY - JOUR

T1 - Markets versus negotiations

T2 - An experimental investigation

AU - Kugler, Tamar

AU - Neeman, Zvika

AU - Vulkan, Nir

N1 - Funding Information: We are grateful for the suggestions made by Gary Bornstein, Itzhak Gilboa, Daniele Paserman, Marc Rysman, and seminar audiences at the Hebrew University, and at the ESA Meeting in Strasbourg. An associate editor and two anonymous referees provided useful comments. Financial support from the Aims Byudks foundation is gratefully acknowledged.

PY - 2006/7

Y1 - 2006/7

N2 - 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.

AB - 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.

KW - Centralized markets

KW - Decentralized bargaining

KW - Decentralized markets

KW - Market design

KW - Market formation

UR - http://www.scopus.com/inward/record.url?scp=33646794666&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=33646794666&partnerID=8YFLogxK

U2 - 10.1016/j.geb.2005.06.003

DO - 10.1016/j.geb.2005.06.003

M3 - Article

AN - SCOPUS:33646794666

SN - 0899-8256

VL - 56

SP - 121

EP - 134

JO - Games and Economic Behavior

JF - Games and Economic Behavior

IS - 1

ER -

Markets versus negotiations: An experimental investigation

Abstract

Keywords

ASJC Scopus subject areas

Access to Document

Other files and links

Fingerprint

Cite this