This study provides a structural analysis of detailed, alternating‐offer bargaining data from eBay, deriving bounds on buyers and sellers private value distributions and the gains from trade using a range of assumptions on behavior and the informational environment. These assumptions range from 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 and inefficient breakdown. For the median product, bargaining ends in impasse in 37% of negotiations even when the buyer values the good more than the seller.
MLA
Freyberger, Joachim, and Bradley J. Larsen. “How Well Does Bargaining Work in Consumer Markets? A Robust Bounds Approach.” Econometrica, vol. 93, .no 1, Econometric Society, 2025, pp. 161-194, https://doi.org/10.3982/ECTA20125
Chicago
Freyberger, Joachim, and Bradley J. Larsen. “How Well Does Bargaining Work in Consumer Markets? A Robust Bounds Approach.” Econometrica, 93, .no 1, (Econometric Society: 2025), 161-194. https://doi.org/10.3982/ECTA20125
APA
Freyberger, J., & Larsen, B. J. (2025). How Well Does Bargaining Work in Consumer Markets? A Robust Bounds Approach. Econometrica, 93(1), 161-194. https://doi.org/10.3982/ECTA20125
Supplement to "How Well Does Bargaining Work in Consumer Markets? A Robust Bounds Approach"
Joachim Freyberger and Bradley J. Larsen
This file contains additional material of "How Well Does Bargaining Work in Consumer Markets? A Robust Bounds Approach", including auxiliary lemmas, proofs of the main theorems, additional discussion of the data and the assumptions, details on estimation and inference, Monte Carlo simulations, and a discussion of two extensive-form bargaining models.
Supplement to "How Well Does Bargaining Work in Consumer Markets? A Robust Bounds Approach"
Joachim Freyberger and Bradley J. Larsen
The replication package for this paper is available at https://doi.org/10.5281/zenodo.13937118. The Journal checked the data and codes included in the package for their ability to reproduce the results in the paper and approved online appendices.
The Executive Committee of the Econometric Society has approved an increase in the submission fees for papers in Econometrica. Starting January 1, 2025, the fee for new submissions to Econometrica will be US$125 for regular members and US$50 for student members.
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