Does Laboratory Trading Mirror Behavior in Real World Markets? Fair Bargaining and Competitive Bidding on EBay

Gary E. Bolton () and Axel Ockenfels

No 36, Working Paper Series in Economics from University of Cologne, Department of Economics

Abstract: We conducted a controlled field experiment on eBay and examined to what extent both social and competitive laboratory behavior is robust to institutionally complex real world markets with experienced traders, who selected themselves into these markets. EBay’s natural trading system provides bridges between lab and field environment that can be exploited to explore differences in behavior in the two environments. We find that many sellers do not make use of their commitment power as predicted by standard theories of both selfish and social behavior. However, a concern for equity strongly affects outcomes and reputation building in bilateral bargaining, while buyer competition effectively masks this concern and robustly yields equilibrium outcomes. The dichotomy of behaviors mirrors observations in laboratory research. Furthermore, we find that behavioral patterns in the field experiment mirror fully naturally occurring trading patterns in the market.

New Economics Papers: this item is included in nep-com, nep-exp and nep-mkt
Date: 2007-08-16
View list of references

Downloads: (external link)
http://ockenfels.uni-koeln.de/RePEc/download/wp0036.pdf (application/pdf)

Related works:
Working Paper: Does Laboratory Trading Mirror Behavior in Real World Markets? Fair Bargaining and Competitive Bidding on EBay (2008)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Access Statistics for this paper

More papers in Working Paper Series in Economics from University of Cologne, Department of Economics
Contact information at EDIRC.
Series data maintained by Peter Werner ().