"Buy-It-Now" or "Sell-It-Now" Auctions: Effects of Changing Bargaining Power in Sequential Trading Mechanisms

Tim Grebe (), Radosveta Ivanova-Stenzel () and Sabine Kröger ()
Additional contact information
Tim Grebe: InterVal GmbH
Radosveta Ivanova-Stenzel: Technical University of Berlin

No 9566, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: We study experimentally the effect of bargaining power in two sequential mechanisms that offer the possibility to trade at a fixed price before an auction. In the "Buy-It-Now" format, the seller has the bargaining power and offers a price prior to the auction; whereas in the "Sell-It-Now" format, it is the buyer. Both formats are extensively used in online and offline markets. Despite very different strategic implications for buyers and sellers, results from our experiment suggest no effects of bargaining power on aggregate outcomes. There is, however, substantial heterogeneity within sellers. Sellers who ask for high prices not only benefit from having the bargaining power but also earn revenue above those expected in the auction.

Keywords: Buy-It-Now price; Sell-It-Now price; private value auction; single item auction; sequential selling mechanism; fixed price (search for similar items in EconPapers)
JEL-codes: C72 C91 D44 D82 (search for similar items in EconPapers)
Pages: 9 pages
Date: 2015-12
New Economics Papers: this item is included in nep-com, nep-exp and nep-gth
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Related works:
Journal Article: “Buy-It-Now” or “Sell-It-Now” auctions: Effects of changing bargaining power in sequential trading mechanisms (2016)
Working Paper: "Buy-It-Now" or "Sell-It-Now" Auctions: Effects of Changing Bargaining Power in Sequential Trading Mechanisms (2015)
Working Paper: “Buy-It-Now” or “Sell-It-Now” Auctions: Effects of Changing Bargaining Power in Sequential Trading Mechanisms (2015)
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