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Learning to Be Loyal. A Study of the Marseille Fish Market Alan P. Kirman, GREQAM, Marseille, France Nicolaas J. Vriend, Queen Mary and Westfield College, University of London in: D. Delli Gatti, M. Gallegati & A.P. Kirman (Eds.), Interaction and Market Structure. Essays on Heterogeneity in Economics. ( Lecture Notes in Economics and Mathematical Systems 484), Springer, Berlin, 2000, p. 33-56 
Full paper (PDF format)
See also: Evolving Market Structure: An ACE Model of Price Dispersion and Loyalty, Journal of Economic Dynamics and Control, 2001. Abstract.
We study the wholesale fish market in Marseille. Two of the stylized facts
of that market are high loyalty of buyers to sellers, and persistent price
dispersion, although the same population of sellers and buyers meets in the
same market hall on every day. We build a minimal model of adaptive
agents. Sellers decide on quantities to supply, prices to ask, and how to
treat loyal customers. Buyers decide which seller to visit, and which prices
to accept. Learning takes place through reinforcement. We analyze the
emergence of both stylized facts price dispersion and high loyalty. In a
coevolutionary process, buyers learn to become loyal as sellers learn to
offer higher utility to loyal buyers, while these sellers, in turn, learn to
offer higher utility to loyal buyers as they happen to realize higher gross
revenues from loyal buyers. Nick Vriend, n.vriend@qmul.ac.uk Last modified 2012-12-07 |