Generalizations and Extensions of the Decentralized Trade Model

Christian Korth

Chapter Chapter 6 in Fairness in Bargaining and Markets, 2009, pp 103-137 from Springer

Abstract: Abstract The theoretical analysis of matching markets with bilateral bargaining of chapter 5 is based on a stylized model. Several assumptions are made to enable or simplify analysis and discussion of this model. The results are meant to be relevant for real-life markets like used-car, housing, and labor markets, which closely resemble the modeled market. Of course, real-life markets do not exactly match the model’s setup, but are different in important regards. For example, the model assumes perfect homogeneity of buyers’ and sellers’ preferences. However, since the dawn of experimental economics, heterogeneity in subjects’ behavior is an established fact. Based on this observation homogenous preferences and beliefs are unlikely to describe real-life agents well.

Keywords: Discount Factor; Equilibrium Price; Reference Price; Price Offer; Buyer Type (search for similar items in EconPapers)
Date: 2009
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Persistent link: https://EconPapers.repec.org/RePEc:spr:lnechp:978-3-642-02253-1_6

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DOI: 10.1007/978-3-642-02253-1_6

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