Kugler, T. and Neeman, Z. and Vulkan, N. (2003) Markets versus negotiations: an experimental invesigation. (ELSE Working Papers 104). ESRC Centre for Economic Learning and Social Evolution: London, UK.
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Abstract
We consider the consequences of competition between two types of experimental exchange mechanisms, a decentralized bargaining market, and a centralized mar- ket. 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 at- tractive until almost no opportunities for mutually beneficial trade remain outside the centralized marketplace.
| Type: | Working / discussion paper |
|---|---|
| Title: | Markets versus negotiations: an experimental invesigation |
| Open access status: | An open access version is available from UCL Discovery |
| Publisher version: | http://else.econ.ucl.ac.uk/newweb/papers.php |
| Language: | English |
| Keywords: | JEL classification: C78, D40, L10. Centralized markets, decentralized markets, decentralized bargaining, market design, market formation |
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