Bargaining or Searching for a Better Price? - An Experimental Study

Francesco Feri and Anita Gantner ()

Working Papers from Faculty of Economics and Statistics, Universität Innsbruck

Abstract: This experimental study investigates two bargaining games with twosided 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)
JEL-codes: C78 C91 D82 D83 (search for similar items in EconPapers)
Pages: 48
Date: 2010-10
New Economics Papers: this item is included in nep-cta and nep-exp
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https://www2.uibk.ac.at/downloads/c4041030/wpaper/2010-27.pdf (application/pdf)

Related works:
Journal Article: Bargaining or searching for a better price? - An experimental study (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:inn:wpaper:2010-27

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