Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/126660
Authors: 
Grebe, Tim
Ivanova-Stenzel, Radosveta
Kröger, Sabine
Year of Publication: 
2015
Series/Report no.: 
IZA Discussion Papers 9566
Abstract: 
We study experimentally the effect of bargaining power in two sequential mechanisms that offer the possibility to trade at a fixed price before an auction. In the "Buy-It-Now" format, the seller has the bargaining power and offers a price prior to the auction; whereas in the "Sell-It-Now" 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 ask for high prices not only benefit from having the bargaining power but also earn revenue above those expected in the auction.
Subjects: 
Buy-It-Now price
Sell-It-Now price
private value auction
single item auction
sequential selling mechanism
fixed price
JEL: 
C72
C91
D44
D82
Document Type: 
Working Paper

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