Bazaar economics

John H. Miller and Michele Tumminello

Journal of Economic Behavior & Organization, 2015, vol. 119, issue C, 163-181

Abstract: Competitive Equilibrium theory has been a widely accepted and extensively used cornerstone in economics for over a century. Here, we suggest a complementary model—motivated by the haggling in a bazaar—that offers a useful, first-principle account of market behavior that better accounts for the observed outcomes in forty market experiments. The Bazaar model uses simple stochastic processes to drive the matching of traders and the determination of price. We show that as agents become more impatient, the system tends toward more Competitive-Equilibrium-like outcomes.

Keywords: Competitive Equilibrium; Disequilibrium; Supply and demand; Stochastic processes (search for similar items in EconPapers)
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:119:y:2015:i:c:p:163-181

DOI: 10.1016/j.jebo.2015.08.005

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