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Should the Same Side of the Market Always Move First in a Transaction?. An Experimental Study

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Author Info
Eline van der Heijden
Jan H.M. Nelissen
Harrie A.A. Verbon

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Abstract

We investigate whether transactions where the buyer (or seller) always moves first and the seller (or buyer) always moves second in the exchange give higher payoffs than transactions in which it is randomly determined who moves first. We examine the effect of two treatment variables: partners versus strangers, and fixed versus changing positions. We find that both with fixed and with changing positions, second movers take advantage of their position by exploiting the first mover. But with fixed positions, exploitation occurs significantly less, while reciprocal exchanges happen more often. However, fixed positions result in very unevenly distributed payoffs.

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Publisher Info
Article provided by Mohr Siebeck, Tübingen in its journal Journal of Institutional and Theoretical Economics.

Volume (Year): 158 (2002)
Issue (Month): 2 (June)
Pages: 344-
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Handle: RePEc:mhr:jinste:urn:sici:0932-4569(200206)158:2_344:stssot_2.0.tx_2-k

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Find related papers by JEL classification:
C90 - Mathematical and Quantitative Methods - - Design of Experiments - - - General
D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Ernst Fehr & Simon Gaechter, . "Fairness and Retaliation: The Economics of Reciprocitys," IEW - Working Papers iewwp040, Institute for Empirical Research in Economics - IEW. [Downloadable!]
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  2. Ernst FEHR & Simon GÄCHTER & Georg KIRCHSTEIGER, 1994. "Reciprocal Fairness and Noncompensating Wage Differentials," Vienna Economics Papers vie9401, University of Vienna, Department of Economics.
  3. Andreoni, James, 1988. "Why free ride? : Strategies and learning in public goods experiments," Journal of Public Economics, Elsevier, vol. 37(3), pages 291-304, December. [Downloadable!] (restricted)
  4. Guth, Werner & Huck, Steffen & Rapoport, Amnon, 1998. "The limitations of the positional order effect: Can it support silent threats and non-equilibrium behavior?," Journal of Economic Behavior & Organization, Elsevier, vol. 34(2), pages 313-325, February. [Downloadable!] (restricted)
  5. Fehr, Ernst & Kirchsteiger, George & Riedl, Arno, 1993. "Does Fairness Prevent Market Clearing? An Experimental Investigation," The Quarterly Journal of Economics, MIT Press, vol. 108(2), pages 437-59, May. [Downloadable!] (restricted)
  6. Camerer, Colin F & Thaler, Richard H, 1995. "Ultimatums, Dictators and Manners," Journal of Economic Perspectives, American Economic Association, vol. 9(2), pages 209-19, Spring. [Downloadable!] (restricted)
  7. Weimann, Joachim, 1994. "Individual behaviour in a free riding experiment," Journal of Public Economics, Elsevier, vol. 54(2), pages 185-200, June. [Downloadable!] (restricted)
  8. Eline C.M. van der Heijden & Jan H.M. Nelissen & Jan J.M. Potters & Harrie A.A. Verbon, 2001. "Simple and Complex Gift Exchange in the Laboratory," Tinbergen Institute Discussion Papers 01-087/3, Tinbergen Institute. [Downloadable!]
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  9. Ernst Fehr & Klaus M. Schmidt, . "A Theory of Fairness, Competition and Cooperation," IEW - Working Papers iewwp004, Institute for Empirical Research in Economics - IEW. [Downloadable!]
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  10. Van der Heijden, Eline C. M. & Nelissen, Jan H. M. & Potters, Jan J. M. & Verbon, Harrie A. A., 1998. "The poverty game and the pension game: The role of reciprocity," Journal of Economic Psychology, Elsevier, vol. 19(1), pages 5-41, February. [Downloadable!] (restricted)
  11. Croson, Rachel T. A., 1996. "Partners and strangers revisited," Economics Letters, Elsevier, vol. 53(1), pages 25-32, October. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Gary Charness & Margarida Corominas-Bosch & GUILLAUME FRECHETTE, 2005. "Bargaining and Network Structure: An Experiment," University of California at Santa Barbara, Economics Working Paper Series 05-05, Department of Economics, UC Santa Barbara. [Downloadable!]
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