Working Paper: NBER ID: w29202
Authors: Joachim Freyberger; Bradley Larsen
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.
Keywords: Bargaining; Consumer Markets; eBay; Negotiation; Private Values
JEL Codes: C57; C78; D47; D82; L81
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| bargaining offers (C78) | trade probability (F17) |
| buyer values good > seller value (D46) | inefficient impasse (D61) |
| first-best probability of trade (F14) | observed trade probability (F17) |
| bargaining actions (C79) | marginal distributions of buyer and seller values (D39) |