Does laboratory trading mirror behavior in real world markets? Fair bargaining and competitive bidding on eBay

Journal of Economic Behavior & Organization, 2014, vol. 97, issue C, 143-154

Abstract: Laboratory market experiments observe a sharp dichotomy between (selfish) competitive behavior and fair-minded social behavior depending on competitive conditions. While the dichotomy is consistent with social preference theory, the often advanced hypothesis that social behavior is an artifact of laboratory conditions has not heretofore been ruled out. We tested these competing hypotheses in a field experiment on eBay conducted with experienced traders. The buyer behavior we observe strongly confirms the social preference hypothesis. Also, the behavioral patterns in the field experiment mirror fully naturally occurring trading patterns in the market. For instance, some sellers do not use their commitment power as predicted by theories of both selfish and social behavior, with the pattern of deviation reflecting traders’ market experience outside the experiment.

Keywords: Competitive pricing; Fairness; eBay; Bargaining; Auction (search for similar items in EconPapers)
JEL-codes: C9 D4 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (11)

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Related works:
Working Paper: Does Laboratory Trading Mirror Behavior in Real World Markets? Fair Bargaining and Competitive Bidding on EBay (2011)
Working Paper: Does Laboratory Trading Mirror Behavior in Real World Markets? Fair Bargaining and Competitive Bidding on EBay (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:97:y:2014:i:c:p:143-154

DOI: 10.1016/j.jebo.2013.11.003

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