This inventory cost diminishes spot activity relative to forward trading volume. Data from computerized double auctions are analyzed. When traders have a choice of institution, prices and quantities resembe a forward only auction. We design laboratory bargaining games to observe behavior in such an environment and compare it to a control design that has no explicit delays. Results show there is a significant first mover advantage, and agreements are more uniformly spread across bargaining periods.
Outcomes are less likely to hit on equal splits.
Fifty-eight percent of the counteroffers made have a lower expected value than the rejected offer.