Markets versus negotiations: An experimental investigation

Tamar Kugler, Zvika Neeman, Nir Vulkan

Research output: Contribution to journalArticle

14 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 (US)
Pages (from-to)121-134
Number of pages14
JournalGames and Economic Behavior
Volume56
Issue number1
DOIs
StatePublished - Jul 1 2006

Keywords

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

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

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