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Bargaining or searching for a better price? - An experimental study

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  • Feri, Francesco
  • Gantner, Anita

Abstract

This experimental study investigates two bargaining games with two-sided incomplete information between a seller and a buyer. In the first game with no outside options many subjects do not use the incomplete information to their advantage as predicted. We find that a model with adjusting priors better explains observed behavior. The second game gives the buyer the option to buy via search or return to bargaining. Here many buyers choose a bargaining agreement when a search outcome is predicted. For those who opt out, search outcomes are overall efficient and behavior is relatively close to the optimal search policy.

Suggested Citation

  • Feri, Francesco & Gantner, Anita, 2011. "Bargaining or searching for a better price? - An experimental study," Games and Economic Behavior, Elsevier, vol. 72(2), pages 376-399, June.
  • Handle: RePEc:eee:gamebe:v:72:y:2011:i:2:p:376-399
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    References listed on IDEAS

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    Cited by:

    1. Ahmet Ozkardas & Agnieszka Rusinowska, 2013. "An application of wage bargaining to price negotiation with discount factors varying in time," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00881151, HAL.
    2. Ahmet Ozkardas & Agnieszka Rusinowska, 2013. "An application of wage bargaining to price negotiation with discount factors varying in time," Post-Print halshs-00881151, HAL.

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