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What If Hayek Goes Shopping in the Bazaar

8 Pages Posted: 21 Sep 2006  

Marco Lamieri

Intesa SanPaolo SpA

Enrico Bertacchini

University of Turin - Department of Economics

Date Written: September 20, 2006

Abstract

The paper presents a comparative analysis of the peculiar institutional features of two retail markets: the middle eastern Bazaar and the western Mall (shopping center). We study the informational functions and performance of the different market institutions using an Agent Based Computational Economics (ACE) model under the assumption of behavioral learning by agents. Sellers decide which price setting strategy to adopt whereas buyers form their price beliefs exploring the market and decide which price to accept.

The agents learn how to adapt and behave within the specific institutional framework to carry out their economic transactions, but market institutions, as mechanisms to coordinate information of market participants are expected to affect the price dynamics. The main area of interest concerns the question of whether the economic argument on the presumed underperformance of bazaar institutions respect to more competitive markets holds true or it is necessary a reassessment on it.

Keywords: Agent's beliefs,learning, adaptive behavior, market institutions, price dynamics

JEL Classification: C70, D40, D80, L10

Suggested Citation

Lamieri, Marco and Bertacchini, Enrico, What If Hayek Goes Shopping in the Bazaar (September 20, 2006). Available at SSRN: https://ssrn.com/abstract=931724 or http://dx.doi.org/10.2139/ssrn.931724

Marco Lamieri (Contact Author)

Intesa SanPaolo SpA ( email )

Piazza S. Carlo, 156
Torino, 10121
Italy

Enrico Bertacchini

University of Turin - Department of Economics ( email )

Via Po 53
Torino, Turin - Piedmont 10100
Italy

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