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A MARKET WITH FRICTIONS IN THE MATCHING PROCESS: AN EXPERIMENTAL STUDY *
Author(s) -
Cason Timothy N.,
Noussair Charles
Publication year - 2007
Publication title -
international economic review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 2.658
H-Index - 86
eISSN - 1468-2354
pISSN - 0020-6598
DOI - 10.1111/j.1468-2354.2007.00441.x
Subject(s) - consistency (knowledge bases) , matching (statistics) , microeconomics , construct (python library) , economics , forward auction , price dispersion , econometrics , common value auction , computer science , mathematics , statistics , auction theory , artificial intelligence , programming language
We construct a laboratory market in which there is a friction in the matching between buyers and sellers. Sellers simultaneously post prices and then buyers simultaneously choose a seller. If more than one buyer chooses the same seller, the seller's single unit is randomly sold to one of them. Our results show a broad consistency with theoretical predictions, although price dispersion exists and is slow to decay. Prices also exceed the equilibrium level when there are only two sellers, and buyers' purchase probabilities are insufficiently responsive to price differences when there are two sellers.