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Price Coordination under List Pricing and Discounting: Experimental Evidence
Full text linkList-pricing and discounting is common in both retail and wholesale markets. Its interpretation amongst competition authorities varies from being procompetitive to collusion facilitating. We experimentally test how list pricing and discounting impact prices in a capacity constrained Bertrand-Edgeworth duopoly with symmetric and asymmetric firms facing constant marginal costs. We find that, relative to the symmetric baseline experiments, list pricing and discounting generate higher equilibrium prices for (symmetric) firms. Prices in the asymmetric-list price duopoly are also higher, however, the effect is much smaller than under symmetry. The introduction of asymmetry results in higher prices. The smaller firms gain more from list pricing and use it to signal price commitment. We also find that the announcement of exactly the same list prices signals sellers´ intentions to set the same market prices. When list prices are different, then the minimum of the list prices works as a coordination device in the market prices stage. Setting the same list prices in the first stage leads to coordination in market prices and to significantly higher prices
Revisiting the U-shaped Patterns in Volatility and Price Impacts: Novel Results Using Trade-Time Estimates
Full text linkWhen measured using trade-time aggregation, intraday patterns in trading activity remain U-shaped, but estimates of volatility and Kyle’s lambda fall sharply from open to close. U-shaped patterns in volatility and Kyle’s lambda found using commonly-used calendar-time aggregation reflect over-aggregation biases when trading activity is high as near the open and close. Indicative of imperfectly-competitive liquidity provision, trade-time aggregation also reveals that in active markets, expected trade imbalances are positively priced and unexpected trade imbalances are more strongly priced when they share the sign of expected imbalances, while in less active markets expected trade imbalances are negatively priced
Preferences or Confounders? Persistent Gender Gap in Competition Across Four Continents
Full text linkThe gender gap in willingness to compete is thought to underlie enduring inequalities in education, career choice, and labor market outcomes. Yet it remains unclear whether the gap reflects true preference differences or results from confounding factors such as task stereotypes, overconfidence, or risk aversion. We test gender differences in competition entry across eight pre-registered studies in seven countries spanning four continents (Dominican Republic, Ivory Coast, El Salvador, Madagascar, Spain, The Philippines, and Uruguay; total n = 1,833), using an experimental design that systematically minimizes these confounds: (i) based on a non-male-stereotyped task (the Reading the Mind in the Eyes Test); (ii) matching participants with an opponent of identical baseline, piece-rate performance to remove strategic uncertainty and the role of beliefs; and (iii) reducing the riskiness of competition. Despite these features—and no consistent gender gap in performance—we find that women enter competition significantly less than men (meta-analytic difference = 6–7 %), with no cross-country heterogeneity. Overconfidence is higher among men and predicts competition entry, but it does not explain the gender gap. Risk preferences play no role. Thus, in a setting designed to equalize opportunity and eliminate known drivers of the gap, gender differences in competition persist. This suggests that a residual preference for competition difference may contribute to gender disparities in high-stakes economic environments across cultures
General Equilibrium Markets as Distributed Computational Systems
Full text linkOne principal capability of markets is the coordination of information distributed among market participants who typically have competing incentives. Despite distributed information and conflicting incentives, competition among market participants often leads to socially desirable resource allocation. In this sense a market is a distributed multi-agent mechanism that, in effect, finds an optimal solution to a computational problem that is not known to any individual market participant. The purpose of this paper is to demonstrate that capacity of markets by defining automated agents that interact with one another in a distributed system that implements a socially desirable resource allocation. In this sense, market agents extend in several meaningful directions our concept of the function and capabilities of artificial intelligence. Market agents have been developed for single (partial equilibrium) markets going back over thirty-five years. This paper extends that research strategy in two directions. The paper reports results of simulations with automated agents in a general equilibrium market and, in addition, those agents interact in their market with human subjects in a market experiment that includes both human subjects and automated agents, so that we can better assess the bargaining capacity of the agents relative to human capabilities
