Experimental evidence on covert bargaining markets

Margherita Comola () and Marcel Fafchamps
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Margherita Comola: RITM - Réseaux Innovation Territoires et Mondialisation - Université Paris-Saclay, PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - ENPC - École nationale des ponts et chaussées - IP Paris - Institut Polytechnique de Paris, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement - ENPC - École nationale des ponts et chaussées - IP Paris - Institut Polytechnique de Paris
Marcel Fafchamps: Stanford University

PSE-Ecole d'économie de Paris (Postprint) from HAL

Abstract: We conduct a laboratory experiment to study a decentralized market where players engage in multiple (bilateral and multilateral) transactions. We propose a novel class of bargaining protocols that allow players to keep bid amounts shrouded from each other (covert bargaining). We show that these bargaining protocols double ex-post efficiency relative to a mechanism without bargaining, mainly to the benefit of players (particularly buyers) rather than the silent auctioneer. Aggregate efficiency nonetheless suffers from the fact that buyers bargain harder than sellers and that some players over-bargain to appropriate a larger share of the unknown surplus.

Keywords: Experiment; Private information; Bargaining; Decentralized market (search for similar items in EconPapers)
Date: 2026-02
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Published in Journal of Economic Behavior and Organization, 2026, 242, ⟨10.1016/j.jebo.2025.107402⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:pseptp:halshs-05838869

DOI: 10.1016/j.jebo.2025.107402

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