Fairness, price stickiness, and history dependence in decentralized trade
The paper investigates price formation in a decentralized market with random matching. Agents are assumed to have subdued social preferences: buyers, for example, prefer a lower price to a higher one but experience reduced utility increases below a reference price that serves as a common fairness benchmark. The strategic equilibrium reflects market fundamentals, but it is markedly less sensitive to the buyer-seller ratio near the fair price benchmark. Prices may be sticky around very different reference levels in markets with otherwise identical fundamentals. The implied history dependence turns out to be mitigated rather than exacerbated by friction.
Year of publication: |
2009
|
---|---|
Authors: | Korth, Christian ; Napel, Stefan |
Published in: |
Journal of Economic Behavior & Organization. - Elsevier, ISSN 0167-2681. - Vol. 71.2009, 2, p. 502-514
|
Publisher: |
Elsevier |
Keywords: | Random matching Price stickiness Social preferences History dependence Reference dependence |
Saved in:
Online Resource
Saved in favorites
Similar items by person
-
Fairness, Price Stickiness, and History Dependence in Decentralized Trade
Korth, Christian, (2008)
-
Fairness, Price Stickiness, and History Dependence in Decentralized Trade
Korth, Christian, (2009)
-
Reciprocity - an indirect evolutionary analysis
Berninghaus, Siegfried K., (2003)
- More ...