Information Sharing in Asymmetric Buyer-Seller Negotiations: an Experimental Study

This paper reports results of experiments mimicking buyer-seller negotiations over two periods, in which two factors introduce bargaining asymmetries—a threat price from a competitor of the supplier and private information held by either the buyer or seller. Hypotheses are developed, which reflect the possible effects of information sharing and threat price on negotiated price outcomes. The impact of information sharing should depend on whether a threat price exists; it should also depend on which party, buyer or seller, is in control of the information. In each experiment conducted, the bargaining frontier consists of specific price solutions. Information is provided on the utility of each price solution. Results show that there is a main effect of threat in lowering negotiated prices. There is also evidence of a main effect of information sharing, and that the impact of sharing depends on whether there is a threat price. The magnitude of the information sharing effect also depends on whether the seller or the buyer initiates the exchange process. Interestingly, it is disadvantageous for a seller to share information in the absence of a threat. When a threat price exists, sellers can partially mitigate some of the effects of the threat through information sharing. Specifically, we find that the best a seller can achieve is an equal earning settlement, a solution in which both parties earn equal amounts of utility from their worst possible utility points. Buyers perceive the outcomes to be fair when sellers share information; they also consider that sellers have significantly influenced them, when the latter use information sharing as a selling strategy. When buyers share information themselves, they benefit regardless of whether they possess a threat price or not. We conclude that a seller might benefit from sharing private information, but only when facing a credible threat.



Citation:

ABHIK ROY, MICHAEL MENASCO, and ANTHONY MYERS (2009) ,"Information Sharing in Asymmetric Buyer-Seller Negotiations: an Experimental Study", in AP - Asia-Pacific Advances in Consumer Research Volume 8, eds. Sridhar Samu, Rajiv Vaidyanathan, and Dipankar Chakravarti, Duluth, MN : Association for Consumer Research, Pages: 156-157.

Authors

ABHIK ROY, QUINNIPIAC UNIVERSITY, USA
MICHAEL MENASCO, CALIFORNIA STATE UNIVERSITY, SAN BERNARDINO, USA
ANTHONY MYERS, BECHTEL JACOBS COMPANY, USA



Volume

AP - Asia-Pacific Advances in Consumer Research Volume 8 | 2009



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