Intermediaries in Bargaining: Evidence from Business-to-Business Used-Car Inventory Negotiations

46 Pages Posted: 16 Aug 2021 Last revised: 5 Mar 2022

See all articles by Bradley Larsen

Bradley Larsen

Stanford University - Department of Economics; National Bureau of Economic Research (NBER); eBay Research Labs

Carol Lu

Stanford University

Anthony Lee Zhang

University of Chicago - Booth School of Business

Date Written: August 2021

Abstract

We analyze data on tens of thousands of alternating-offer, business-to-business negotiations in the wholesale used-car market, with each negotiation mediated (over the phone) by a third-party company. The data shows the identity of the employee mediating the negotiations. We find that who intermediates the negotiation matters: high-performing mediators are 22.03% more likely to close a deal than low performers. Effective mediators improve bargaining outcomes by helping buyers and sellers come to agreements faster, not by pushing disagreeing parties to persist, and have real effects on efficiency for some negotiations, overcoming some of the inefficiency inherent in incomplete-information settings.

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Suggested Citation

Larsen, Bradley and Lu, Carol and Zhang, Anthony Lee, Intermediaries in Bargaining: Evidence from Business-to-Business Used-Car Inventory Negotiations (August 2021). NBER Working Paper No. w29159, Available at SSRN: https://ssrn.com/abstract=3905723

Bradley Larsen (Contact Author)

Stanford University - Department of Economics ( email )

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HOME PAGE: http://www.stanford.edu/~bjlarsen/research.html

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Carol Lu

Stanford University

Anthony Lee Zhang

University of Chicago - Booth School of Business ( email )

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Chicago, IL 60637
United States

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