Competition modulates buyers' reaction to sellers' cheap talk

Arbeitspapier

Sellers in real-estate markets, on internet platforms, in auction houses, and so forth, routinely pose non-binding price requests. Using a laboratory experiment, we examine how competition moderates the way such cheap-talk communication affects trade between buyers and sellers. For bilateral trade, the literature has identified efficiency, anchoring, and granularity effects of cheap-talk communication on negotiation outcomes. Our results show that most of these effects survive with competition, although some of them become weaker. Our main findings are the following: (i) The ability of sellers to make non-binding price requests has a positive effect on efficiency in that it helps trading partners close marginal deals both in bilateral bargaining and in competition; (ii) Competition reduces the informativeness of the price requests and weakens the anchoring effect of the level of the price request; (iii) Sellers communicating more granular price requests attract more granular buyer bids; (iv) The granularity of the seller's price request does not impact the selling price.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: Tinbergen Institute Discussion Paper ; No. TI 2023-035/I

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Noncooperative Games ; Design of Experiments: Laboratory, Group Behavior ; Micro-Based Behavioral Economics: Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making‡
• Thema: Cheap-talk communication ; efficiency ; anchoring ; price granulatiry ; laboratory experiment

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Onderstal, Sander ; Shalvi, Shaul ; Soraperra, Ivan
• Ereignis: Veröffentlichung
• (wer): Tinbergen Institute
• (wo): Amsterdam and Rotterdam
• (wann): 2023

Weitere Informationen

• Handle: http://hdl.handle.net/10419/273846
• Letzte Aktualisierung: 10.03.2025, 11:44 MEZ