What if Hayek goes shopping in the bazaar?

Lamieri, Marco and Bertacchini, Enrico (2006): What if Hayek goes shopping in the bazaar?

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.

• Item Type: MPRA Paper
• Language: English
• Keywords: Agent's beliefs; learning; adaptive behavior; market institutions; price dynamics
• Subjects: D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D80 - General; L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L10 - General; C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory > C70 - General; D - Microeconomics > D4 - Market Structure, Pricing, and Design > D40 - General

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