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Fairness, price stickiness, and history dependence in decentralized trade

[journal article]

Korth, Christian; Napel, Stefan

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Please use the following Persistent Identifier (PID) to cite this document:http://nbn-resolving.de/urn:nbn:de:0168-ssoar-290371

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Abstract "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." [auhtor's abstract]
Classification Methods and Techniques of Data Collection and Data Analysis, Statistical Methods, Computer Methods; National Economy
Free Keywords Random matching; Price stickiness; Social preferences; History dependence; Reference dependence
Document language English
Publication Year 2009
Page/Pages p. 502-514
Journal Journal of Economic Behavior & Organization, 71 (2009) 2
DOI http://dx.doi.org/10.1016/j.jebo.2009.03.010
Status Postprint; peer reviewed
Licence PEER Licence Agreement (applicable only to documents from PEER project)