Market Culture: How Rules Governing Exploding Offers Affect Market Performance
- (pp. 199-219)
Abstract
Many markets encounter difficulty maintaining a thick marketplace because they experience transactions made at dispersed times. To address such problems, many markets try to establish norms concerning when offers can be made, accepted, and rejected. Examining such markets suggests it is difficult to establish a thick market at an efficient time if firms can make exploding offers, and workers cannot renege on early commitments. Laboratory experiments allow us to isolate the effects of exploding offers and binding acceptances. In a simple experiment, we find inefficient early contracting when firms can make exploding offers and applicants' acceptances are binding. (JEL C91, D40, D81)Citation
Niederle, Muriel, and Alvin E. Roth. 2009. "Market Culture: How Rules Governing Exploding Offers Affect Market Performance." American Economic Journal: Microeconomics, 1 (2): 199-219. DOI: 10.1257/mic.1.2.199Additional Materials
JEL Classification
- C91 Design of Experiments: Laboratory, Individual
- D40 Market Structure and Pricing: General
- D81 Criteria for Decision-Making under Risk and Uncertainty
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