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

  • Feri, Francesco
  • Gantner, Anita
Registered author(s):

    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.

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    File URL: http://www.sciencedirect.com/science/article/pii/S0899825610001430
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    Article provided by Elsevier in its journal Games and Economic Behavior.

    Volume (Year): 72 (2011)
    Issue (Month): 2 (June)
    Pages: 376-399

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    Handle: RePEc:eee:gamebe:v:72:y:2011:i:2:p:376-399
    Contact details of provider: Web page: http://www.elsevier.com/locate/inca/622836

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