Working Paper: NBER ID: w24306
Authors: Matthew Backus; Thomas Blake; Bradley Larsen; Steven Tadelis
Abstract: We study patterns of behavior in bilateral bargaining situations using a rich, new dataset describing over 88 million listings from eBay's Best Offer platform, with back-and-forth bargaining occurring in over 25 million of these listings. We document patterns of behavior and relate them to "rational" and "psychological" theories of bargaining and find that bargaining patterns are consistent with elements of both approaches. Most notably, players with more bargaining strength typically receive better outcomes, and players exhibit equitable behavior by making offers that split-the-difference between negotiating positions. We are publicly releasing this new dataset to support additional empirical bargaining research.
Keywords: Bargaining; Negotiation; eBay; Behavioral Economics; Game Theory
JEL Codes: C7; D0; L0
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| bargaining strength (experience, patience) (J52) | negotiation outcomes (C78) |
| more patient buyers (G40) | lower final prices (D41) |
| more experienced sellers (F10) | higher final prices (G13) |
| equitable behavior (offers that split the difference) (C78) | likelihood of offer acceptance (M51) |
| nature of goods (L60) | dynamics of negotiations (D74) |
| buyer heterogeneity (D11) | variations in outcomes (I14) |