TY  - JOUR
AU  - Niederle,Muriel
AU  - Roth,Alvin E.
TI  - Market Culture: How Norms Governing Exploding Offers Affect Market Performance
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 10256
PY  - 2004
Y2  - February 2004
UR  - http://www.nber.org/papers/w10256
L1  - http://www.nber.org/papers/w10256.pdf
N1  - Author contact info:
Muriel Niederle
Department of Economics
579 Serra Mall
Stanford University
Stanford, CA 94305-6072
Tel: 650/723-7359
Fax: 650/725-5702
E-Mail: niederle@stanford.edu

Alvin E. Roth
Department of Economics
Stanford University
579 Serra Mall
Stanford, CA 94305
Tel: 650/725-9147
E-Mail: alroth@stanford.edu
AB  - Many markets have organizations that influence or try to establish norms concerning when offers can be made, accepted and rejected. Examining a dozen previously studied markets suggests that markets in which transactions are made far in advance are markets in which it is acceptable for firms to make exploding offers, and unacceptable for workers to renege on commitments they make, however early. But this evidence is only suggestive, because the markets differ in many ways other than norms concerning offers. Laboratory experiments allow us to isolate the effects of exploding offers and binding acceptances. In a simple environment, in which uncertainty about applicants' quality is resolved over time, we find inefficient early contracting when firms can make exploding offers and applicants' acceptances are binding. Relaxing either of these two conditions causes matching to take place later, when more information about applicants' qualities is available, and consequently results in higher efficiency and fewer blocking pairs. This suggests that elements of market culture may play an important role in influencing market performance.
ER  -