Posted Offer Markets in Near-Continuous Time: An Experimental Investigation

18 Pages Posted: 8 Oct 2009

See all articles by Douglas D. Davis

Douglas D. Davis

Virginia Commonwealth University - School of Business - Department of Economics

Oleg Korenok

Virginia Commonwealth University - School of Business

Abstract

This paper reports an experiment conducted to evaluate a “near-continuous” variant of the posted offer trading institution, where the number of periods in a market session is increased by reducing sharply each period’s maximum length. Experimental results suggest that although decisions in time-truncated periods are not equivalent to periods of longer duration, extensive repetition improves considerably the drawing power of equilibrium predictions in some challenging environments. Nevertheless, significant deviations remain in the near-continuous framework. We also observe that the extra data collected in the near-continuous framework allow new insights into price convergence and signaling.

JEL Classification: C92, L12, L11

Suggested Citation

Davis, Douglas D. and Korenok, Oleg, Posted Offer Markets in Near-Continuous Time: An Experimental Investigation. Economic Inquiry, Vol. 47, No. 3, pp. 449-466, July 2009. Available at SSRN: https://ssrn.com/abstract=1484201 or http://dx.doi.org/10.1111/j.1465-7295.2007.00109.x

Douglas D. Davis (Contact Author)

Virginia Commonwealth University - School of Business - Department of Economics ( email )

Box 844000
Richmond, VA 23284-4000
United States

Oleg Korenok

Virginia Commonwealth University - School of Business ( email )

1015 Floyd Avenue
Richmond, VA 23284-4000
United States

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