How Well Does Bargaining Work in Consumer Markets? A Robust Bounds Approach

58 Pages Posted: 30 Aug 2021 Last revised: 17 Apr 2022

See all articles by Bradley Larsen

Bradley Larsen

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

Joachim Freyberger

University of Bonn; University of Wisconsin - Madison

Date Written: August 2021


This study provides a structural analysis of detailed, alternating-offer bargaining data from eBay, deriving bounds on buyers and sellers private value distributions using a range of assumptions on behavior. These assumptions range from very 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 in theory and practice. For the median product, bargaining ends in impasses in 43% of negotiations even when the buyer values the good more than the seller.

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Suggested Citation

Larsen, Bradley and Freyberger, Joachim and Freyberger, Joachim, How Well Does Bargaining Work in Consumer Markets? A Robust Bounds Approach (August 2021). NBER Working Paper No. w29202, Available at SSRN:

Bradley Larsen (Contact Author)

Stanford University - Department of Economics ( email )

Landau Economics Building
579 Serra Mall
Stanford, CA 94305-6072
United States


National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
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eBay Research Labs ( email )

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San Jose, CA
United States

Joachim Freyberger

University of Wisconsin - Madison ( email )

716 Langdon Street
Madison, WI 53706-1481
United States

University of Bonn ( email )

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Postfach 2220
Bonn, D-53012

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