A Comparison of Posted-Offer and Double-Auction Pricing Institutions

Jon Ketcham, Vernon Smith () and Arlington Williams

The Review of Economic Studies, 1984, vol. 51, issue 4, 595-614

Abstract: This paper presents an experimental study of a computerized "posted-offer" pricing mechanism that captures many of the basic institutional features of retail exchange in the U.S. Posted-offer market performance is evaluated relative to "double-auction" market performance using two supply and demand designs. Subject experience with the trading mechanism is explicitly considered as an experimental treatment variable. The market data suggest that prices tend to be higher and efficiency lower under posted-offer pricing relative to double auction. However, the institutional effect appears to interact with other design conditions. When feasible, the predictive power of competitive, Nash, and limit-price theoretic equilibria are empirically evaluated.

Date: 1984
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Persistent link: https://EconPapers.repec.org/RePEc:oup:restud:v:51:y:1984:i:4:p:595-614.

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