Abstract
This article analyses the influence of trust on the functioning of a market for perishable goods, where there exists no quality signal and quantities can be scarce. On this market, agents choose between bidding or exchanging through bilateral transactions. It is well accepted in economy that trust plays an important role in transactions but its definition and measurement stay, as far as we know, very elusive. We first propose an original measure of trust, based on the dynamics of agents’ encounters. We then analyze the differences in the network structures and estimate how they affect the market outcomes. We show that, when the transaction links on the auction market reflects the economic constraints of the partners, the relationships on the bilateral market result of economics and non economics determinants. At first glance, the stable co-existence of two market structures looks like a paradox. Our results help to understand the distinctive characteristics and functioning of each mechanism.
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Notes
- 1.
In this article, unless stated otherwise, all the prices considered will be prices per kilo.
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Mignot, S., Vignes, A. (2021). Market Designs and Social Interactions. How Trust and Reputation Influence Market Outcome?. In: Benito, R.M., Cherifi, C., Cherifi, H., Moro, E., Rocha, L.M., Sales-Pardo, M. (eds) Complex Networks & Their Applications IX. COMPLEX NETWORKS 2020 2020. Studies in Computational Intelligence, vol 944. Springer, Cham. https://doi.org/10.1007/978-3-030-65351-4_25
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