How Well Does Bargaining Work in Consumer Markets? A Robust Bounds Approach

Joachim Freyberger and Bradley Larsen

No 29202, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This study provides a structural analysis of detailed, alternating-offer bargaining data from eBay, deriving bounds on buyers and sellers private value distributions using a range of assumptions on behavior. These assumptions range from very weak (assuming only that acceptance and rejection decisions are rational) to less weak (e.g., assuming that bargaining offers are weakly increasing in players' private values). We estimate the bounds and show what they imply for consumer negotiation behavior in theory and practice. For the median product, bargaining ends in impasses in 43% of negotiations even when the buyer values the good more than the seller.

JEL-codes: C57 C78 D47 D82 L81 (search for similar items in EconPapers)
Date: 2021-08
New Economics Papers: this item is included in nep-com, nep-gth, nep-ind and nep-isf
Note: IO TWP
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