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Intermediaries in Bargaining: Evidence from Business-to-Business Used-Car Inventory Negotiations

Author

Listed:
  • 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.

Suggested Citation

  • Bradley Larsen & Carol Hengheng Lu & Anthony Lee Zhang, 2021. "Intermediaries in Bargaining: Evidence from Business-to-Business Used-Car Inventory Negotiations," NBER Working Papers 29159, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:29159
    Note: CF IO LE TWP
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    More about this item

    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce

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