The Role of Outside Option for Sellers and Exogenous BreakDown Rate on Trading: An Experimental Analysis

Date

2019-09-05

Author

Büyükboyacı Hanay, Mürüvvet İlknur

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This paper analyzes how trading and prices change in a double auction environment with outside option for sellers which is given with a probability if trade does not occur in the market, through an experiment. We assume that before the double auction occurs, outside option is announced. By knowing both announced outside option and offers and bids in the double auction (market), a seller chooses between selling his/her good in the market now and receiving outside option in the next round if the game continues to next round with some probability. We use two continuation probabilities in treatments, high or low. First, we find that the probability of choosing the outside option is significantly affected by the continuation probability, sellers’ risk aversion, gender, and cost. Second, we find no effect of time preferences on choosing the outside option. Third, we do not find any effect of continuation probabilities on the market price.

URI

https://hdl.handle.net/11511/81864
https://2019.econtr.org/papers/Buyukboyaci_Role.pdf

Collections

Department of Economics, Conference / Seminar

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Citation Formats

M. İ. Büyükboyacı Hanay, “The Role of Outside Option for Sellers and Exogenous BreakDown Rate on Trading: An Experimental Analysis,” 2019, Accessed: 00, 2021. [Online]. Available: https://hdl.handle.net/11511/81864.