Experimental evidence on covert bargaining markets
Abstract
We conduct a laboratory experiment to study a decentralized market where players engage in multiple (bilateral and multilateral) transactions. We propose a novel class of bargaining protocols that allow players to keep bid amounts shrouded from each other (covert bargaining). We show that these bargaining protocols double ex-post efficiency relative to a mechanism without bargaining, mainly to the benefit of players (particularly buyers) rather than the silent auctioneer. Aggregate efficiency nonetheless suffers from the fact that buyers bargain harder than sellers and that some players over-bargain to appropriate a larger share of the unknown surplus.
Fields of Study & Subjects
Game Theory and Voting Systems
Experimental Behavioral Economics Studies
Auction Theory and Applications
Publication details
- Journal / source
- Journal of Economic Behavior & Organization
- Volume
- 242
- Pages
- 107402–107402
- Publication date
- 8 January 2026
- Language
- EN