Grebe, Tim Ivanova-Stenzel, Radosveta Kröger, Sabine
Year of Publication:
SFB 649 Discussion Paper 2015-037
We study experimentally the effect of bargaining power in sequential trading mechanisms that offer the possibility to trade at a fixed price before an auction. In the "Buy-It-Now" format, the seller offers a price prior to the auction; whereas in the "Sell-It-No" format, it is the buyer. Both formats are extensively used in online and offline markets. Despite very different strategic implications for buyers and sellers, results from our experiment suggest no effects of bargaining power on aggregate outcomes. There is, however, substantial heterogeneity within sellers. Sellers who neglect the adverse selection effect of their own price offer in the BIN format coud benefit from giving up bargaining power by using the "Sell-It-Now" fromat.
Buy-It-Now price Sell-It-Now price private value auction single item auction sequential selling mechanism fixed price auction