PRICE RIGIDITIES AND INSTITUTIONAL VARIATIONS IN MARKETS WITH POSTED PRICES

Standard laboratory posted-offer markets respond slowly and incomplete ly to demand shocks. In these one-sided markets, where sellers control the setting of prices, very little information is transmitted via the process of exchange. For this reason, traders have trouble distinguis hing randomness in their own experience from changes in market fundame ntals. This paper reports the results of twelve laboratory markets con ducted to assess whether some common variants to standard posted-offer rules can correct the adjustment deficiences. Although discounting, m ultiple postings and excess demand information all improve performance , we find that response remains poor, and efficiencies low.