Bargaining or searching for a better price? - An experimental study

Francesco Feri and Anita Gantner

Games and Economic Behavior, 2011, vol. 72, issue 2, 376-399

Abstract: This experimental study investigates two bargaining games with two-sided incomplete information between a seller and a buyer. In the first game with no outside options many subjects do not use the incomplete information to their advantage as predicted. We find that a model with adjusting priors better explains observed behavior. The second game gives the buyer the option to buy via search or return to bargaining. Here many buyers choose a bargaining agreement when a search outcome is predicted. For those who opt out, search outcomes are overall efficient and behavior is relatively close to the optimal search policy.

Keywords: Bargaining; experiment; Outside; option; Search (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (4)

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Working Paper: Bargaining or Searching for a Better Price? - An Experimental Study (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:gamebe:v:72:y:2011:i:2:p:376-399

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