Advertisement

Price Rigidity in an Experimental Market

  • Christian KorthEmail author
Chapter
Part of the Lecture Notes in Economics and Mathematical Systems book series (LNE, volume 627)

Abstract

Experimental evidence of fair behavior in bilateral bargaining situations is well known, and the ultimatum game dominates publications in this domain. In contrast to studies of bilateral interactions, studies of market games mostly find limited or no effects of fairness, which leads many to cast doubt on the relevance of fairness in market settings.

Keywords

Trading Partner Reference Price Reservation Price Ultimatum Game Fair Price 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  1. Albrecht J, Anderson A, Smith E, Vroman S (2007) Opportunistic matching in the housing market. Int Econ Rev 48(2):641–664CrossRefGoogle Scholar
  2. Arai M (2003) Wages, profits, and capital intensity: Evidence from matched worker-firm data. J Labor Econ 21(3):593–618CrossRefGoogle Scholar
  3. Binmore KG, Morgan P, Shaked A, Sutton J (1991) Do people exploit their bargaining power? An experimental study. Games Econom Behav 3(3):295–322CrossRefGoogle Scholar
  4. Binmore KG, Swierzbinski J, Hsu S, Proulx C (1993) Focal points and bargaining. Int J Game Theor 22(4):381–409CrossRefGoogle Scholar
  5. Bolton LE, Warlop L, Alba JW (2003) Consumer perceptions of price (un)fairness. J Consum Res 29(4):474–491CrossRefGoogle Scholar
  6. Brown M, Falk A, Fehr E (2004) Relational contracts and the nature of market interactions. Econometrica 72(3):747–780CrossRefGoogle Scholar
  7. Camerer CF (2003) Behavioral Game Theory: Experiments in Strategic Interaction. Princeton University Press, Princeton, NJGoogle Scholar
  8. Cason TN, Friedman D, Milam GH (2003) Bargaining versus posted price competition in customer markets. Int J Ind Organ 21(2):223–251CrossRefGoogle Scholar
  9. Den Haan WJ, Ramey G, Watson J (2000) Job destruction and propagation of shocks. Am Econ Rev 90(3):482–498CrossRefGoogle Scholar
  10. Diamond PA, Maskin E (1979) An equilibrium analysis of search and breach of contract, I: Steady states. Bell J Econ 10(1):282–316CrossRefGoogle Scholar
  11. Fehr E, Schmidt KM (1999) A theory of fairness, competition and cooperation. Q J Econ 114(3):817–868CrossRefGoogle Scholar
  12. Fehr E, Kirchler E, Weichbold A, Gächter S (1998) When social norms overpower competition: Gift exchange in experimental labor markets. J Labor Econ 16(2):324–351CrossRefGoogle Scholar
  13. Fischbacher U (2007) z-tree: Zurich toolbox for ready-made economic experiments. Exp Econ 10(2):171–178CrossRefGoogle Scholar
  14. Kachelmeier SJ, Shehata M (1992) Culture and competition: A laboratory market comparison between China and the West. J Econ Behav Organ 19(2):145–168CrossRefGoogle Scholar
  15. Kachelmeier SJ, Limberg ST, Schadewald MS (1991) A laboratory market examination of the consumer price response to information about producers' cost and profits. Account Rev 66(4):694–717Google Scholar
  16. Krainer J, LeRoy SF (2002) Equilibrium valuation of illiquid assets. Econ Theor 19(2):223–242CrossRefGoogle Scholar
  17. Kujal P, Smith VL (2008) Fairness and short run price adjustment in posted offer markets. In: Plott CR, Smith VL (eds) Handbook of Experimental Economics Results, vol 1, North-Holland, Amsterdam, Netherlands, chap 6, pp 55–61CrossRefGoogle Scholar
  18. Mortensen DT (1982) The matching process as a noncooperative bargaining game. In: McCall JJ (ed) The Economics of Information and Uncertainty, The University of Chicago Press, Chicago, IL, pp 233–254Google Scholar
  19. Mortensen DT, Pissarides CA (1999) New developments in models of search in the labor market. In: Ashenfelter O, Card D (eds) Handbook of Labor Economics, vol 3, Elsevier, Amsterdam, Netherlands, chap 39, pp 2567–2627Google Scholar
  20. Plott CR, Smith VL (1978) An experimental examination of two exchange institutions. Rev Econ Stud 45(1):133–153CrossRefGoogle Scholar
  21. Rocheteau G, Wright R (2005) Money in search equilibrium, in competitive equilibrium, and in competitive search equilibrium. Econometrica 73(1):175–202CrossRefGoogle Scholar
  22. Rogerson R, Shimer R, Wright R (2005) Search-theoretic models of the labor market: A survey. J Econ Lit 43(4):959–988CrossRefGoogle Scholar
  23. Roth AE (1995) Bargaining experiments. In: Kagel JH, Roth AE (eds) The Handbook of Experimental Economics, Princeton University Press, Princeton, NJ, chap 4, pp 254–348Google Scholar
  24. Rubinstein A, Wolinsky A (1985) Equilibrium in a market with sequential bargaining. Econometrica 53(5):1133–1150CrossRefGoogle Scholar
  25. Shi S (2001) Liquidity, bargaining, and multiple equilibria in a search monetary model. Ann Econ Finance 2(2):325–251Google Scholar
  26. Smith VL, Williams AW (1982) The effects of rent asymmetries in experimental auction markets. J Econ Behav Organ 3(1):99–116CrossRefGoogle Scholar
  27. Walsh CE (2005) Labor market search, sticky prices, and interest rate policies. Rev Econ Dynam 8(4):829–849CrossRefGoogle Scholar
  28. Young HP, Burke MA (2001) Competition and custom in economic contracts: A case study of Illinois agriculture. Am Econ Rev 91(3):559–573CrossRefGoogle Scholar

Copyright information

© Springer-Verlag Berlin Heidelberg 2009

Authors and Affiliations

  1. 1.School of Law, Business and EconomicsUniversity of BayreuthBayreuthGermany

Personalised recommendations