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)
"Market Culture: How Rules Governing Exploding Offers Affect Market Performance."
American Economic Journal: Microeconomics,
Design of Experiments: Laboratory, Individual
Market Structure and Pricing: General
Criteria for Decision-Making under Risk and Uncertainty