In a posted offer market, sellers publicly announce prices on a
take-it-or-leave-it basis. In non-laboratory markets publicly posted
list prices have become common in the last century for most of the
developed economies. The essence of the trading rule in this market is
The standard posted offer auction in a laboratory consists of an
indefinitely repeated series of periods. In each period, trading occurs
in two stages. In stage one, each seller privately selects a price for
the period and indicates the maximum number of units to be offered at
that price. Each seller's price ( and not the quantity) is displayed to
buyers and to other sellers, once they have completed their own posting
decisions. After all sellers have posted their prices in stage two a
shopping sequence begins.
Buyers are randomly drawn, one at a time, and are given the opportunity
to make purchases from any seller who has not sold his maximum specified
sales quantity. When a buyer is done shopping another is selected. This
process continues until all buyers have shopped, or until all offered
units have been purchased.
There are many variants and special cases of posted-offer auctions. One
common one is when the roles of buyers and sellers are reversed, so
that buyer posts bids and sellers are selected in random order to make
sales decisions, the institution is called a posted bid auction.