Working Paper: NBER ID: w29159
Authors: Bradley Larsen; Carol Hengheng Lu; Anthony Lee Zhang
Abstract: We analyze data on tens of thousands of alternating-offer, business-to-business negotiations in the wholesale used-car market, with each negotiation mediated (over the phone) by a third-party company. The data shows the identity of the employee mediating the negotiations. We find that who intermediates the negotiation matters: high-performing mediators are 22.03% more likely to close a deal than low performers. Effective mediators improve bargaining outcomes by helping buyers and sellers come to agreements faster, not by pushing disagreeing parties to persist, and have real effects on efficiency for some negotiations, overcoming some of the inefficiency inherent in incomplete-information settings.
Keywords: Intermediaries; Bargaining; Negotiations; Used Car Market
JEL Codes: C7; D8; L1; L81
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| high-performing mediators (D74) | likelihood of closing a deal (L14) |
| mediator effectiveness (J52) | negotiation success (F51) |
| effective mediators (D74) | probability of agreement (C12) |
| effective mediators (D74) | probability of continuation (C41) |
| mediators (J52) | efficiency in bargaining outcomes (C78) |
| mediator performance heterogeneity (D29) | negotiation outcomes (C78) |