IDEAS home Printed from https://ideas.repec.org/a/eee/jeborg/v105y2014icp178-190.html
   My bibliography  Save this article

Trading partner choice and bargaining culture in negotiations

Author

Listed:
  • Phillips, Owen R.
  • Nagler, Amy M.
  • Menkhaus, Dale J.
  • Huang, Shanshan
  • Bastian, Christopher T.

Abstract

In negotiated transactions the act of choosing trading partners and “who chooses” creates a bargaining culture that influences trading behavior. Results are presented from experimental markets in which paired buyers and sellers negotiate the repeated sale of units. Relative to a market environment in which traders are randomly matched, choosing a trading partner increases the number of units exchanged and lowers negotiated prices. Collective seller earnings suffer. Who does the choosing, that is, whether buyers select sellers or sellers select buyers, further impacts prices and therefore relative earnings. Those choosing tend to be disadvantaged.

Suggested Citation

  • Phillips, Owen R. & Nagler, Amy M. & Menkhaus, Dale J. & Huang, Shanshan & Bastian, Christopher T., 2014. "Trading partner choice and bargaining culture in negotiations," Journal of Economic Behavior & Organization, Elsevier, vol. 105(C), pages 178-190.
    • Handle: RePEc:eee:jeborg:v:105:y:2014:i:c:p:178-190
    DOI: 10.1016/j.jebo.2014.05.005
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0167268114001462
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jebo.2014.05.005?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Bazerman, Max H. & Magliozzi, Thomas & Neale, Margaret A., 1985. "Integrative bargaining in a competitive market," Organizational Behavior and Human Decision Processes, Elsevier, vol. 35(3), pages 294-313, June.
    2. Christopher T. Bastian & Lance B. Gittings, 2007. "The Matching Problem (and Inventories) in Private Negotiation," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 89(4), pages 1073-1084.
    3. Ashenfelter, Orley, et al, 1992. "An Experimental Comparison of Dispute Rates in Alternative Arbitration Systems," Econometrica, Econometric Society, vol. 60(6), pages 1407-1433, November.
    4. Menkhaus, Dale J. & Phillips, Owen R. & Bastian, Christopher T. & Gittings, Lance B., 2007. "AJAE Appendix: The Matching Problem (and Inventories) in Private Negotiation," American Journal of Agricultural Economics APPENDICES, Agricultural and Applied Economics Association, vol. 89(4), pages 1-6, November.
    5. Menkhaus, Dale J. & Bastian, Chris T. & Phillips, Owen R. & O'Neill, Patrick D., 2000. "Supply and Demand Risks in Laboratory Forward and Spot Markets: Implications for Agriculture," Journal of Agricultural and Applied Economics, Cambridge University Press, vol. 32(1), pages 159-173, April.
    6. Neale, Margaret A. & Northcraft, Gregory B., 1986. "Experts, amateurs, and refrigerators: Comparing expert and amateur negotiators in a novel task," Organizational Behavior and Human Decision Processes, Elsevier, vol. 38(3), pages 305-317, December.
    7. Charles N. Noussair & Charles R. Plott & Raymond G. Riezman, 2013. "An Experimental Investigation of the Patterns of International Trade," World Scientific Book Chapters, in: Raymond Riezman (ed.), International Trade Agreements and Political Economy, chapter 17, pages 299-328, World Scientific Publishing Co. Pte. Ltd..
    8. Huber, Vandra L. & Neale, Margaret A., 1986. "Effects of cognitive heuristics and goals on negotiator performance and subsequent goal setting," Organizational Behavior and Human Decision Processes, Elsevier, vol. 38(3), pages 342-365, December.
    9. Dale J. Menkhaus & Owen R. Phillips & Chris T. Bastian, 2003. "Impacts of Alternative Trading Institutions and Methods of Delivery on Laboratory Market Outcomes," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 85(5), pages 1323-1329.
    10. Muthoo,Abhinay, 1999. "Bargaining Theory with Applications," Cambridge Books, Cambridge University Press, number 9780521576475, September.
    11. Ghosh, Dipankar, 1996. "Nonstrategic Delay in Bargaining: An Experimental Investigation," Organizational Behavior and Human Decision Processes, Elsevier, vol. 67(3), pages 312-325, September.
    12. Owen Phillips & Dale Menkhaus & Joseph Krogmeier, 2001. "Laboratory Behavior in Spot and Forward Auction Markets," Experimental Economics, Springer;Economic Science Association, vol. 4(3), pages 243-256, December.
    13. Menkhaus, Dale J. & Bastian, Christopher T. & Phillips, Owen R. & O'Neill, Patrick D., 2000. "Supply And Demand Risks In Laboratory Forward And Spot Markets: Implications For Agriculture," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 32(1), pages 1-15, April.
    14. Neale, Margaret A. & Huber, Vandra L. & Northcraft, Gregory B., 1987. "The framing of negotiations: Contextual versus task frames," Organizational Behavior and Human Decision Processes, Elsevier, vol. 39(2), pages 228-241, April.
    15. Phillips, Owen R. & Menkhaus, Dale J., 2010. "The culture of private negotiation: Endogenous price anchors in simple bilateral bargaining experiments," Journal of Economic Behavior & Organization, Elsevier, vol. 76(3), pages 705-715, December.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Chian Jones Ritten & Christopher Bastian & Owen Phillips, 2021. "The relative effectiveness of law enforcement policies aimed at reducing illegal trade: Evidence from laboratory markets," PLOS ONE, Public Library of Science, vol. 16(11), pages 1-20, November.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Phillips, Owen R. & Menkhaus, Dale J., 2010. "The culture of private negotiation: Endogenous price anchors in simple bilateral bargaining experiments," Journal of Economic Behavior & Organization, Elsevier, vol. 76(3), pages 705-715, December.
    2. Nagler, Amy M. & Menkhaus, Dale J. & Bastian, Christopher T. & Ehmke, Mariah D. & Coatney, Kalyn T., 2013. "Subsidy Incidence in Factor Markets: An Experimental Approach," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 45(1), pages 1-17, February.
    3. Kristiana Hansen & Jonathan Kaplan & Stephan Kroll, 2014. "Valuing Options in Water Markets: A Laboratory Investigation," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 57(1), pages 59-80, January.
    4. Karsyn Lamb & Kristiana Hansen & Christopher Bastian & Amy Nagler & Chian Jones Ritten, 2019. "Investigating Potential Impacts of Credit Failure Risk Mitigation on Habitat Exchange Outcomes," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 73(3), pages 815-842, July.
    5. Chian Jones Ritten & Christopher Bastian & Owen Phillips, 2021. "The relative effectiveness of law enforcement policies aimed at reducing illegal trade: Evidence from laboratory markets," PLOS ONE, Public Library of Science, vol. 16(11), pages 1-20, November.
    6. Bereby-Meyer, Yoella & Moran, Simone & Unger-Aviram, Esther, 2004. "When performance goals deter performance: Transfer of skills in integrative negotiations," Organizational Behavior and Human Decision Processes, Elsevier, vol. 93(2), pages 142-154, March.
    7. Bastian, Christopher T. & Jones Ritten, Chian & Feuz, Bridger & Nagler, Amy M. & Smutko, Steven, 2018. "Can Producers Bargain for Better Prices? Implications from Wyoming Focus Groups," Journal of the ASFMRA, American Society of Farm Managers and Rural Appraisers, vol. 2018.
    8. Yakunina, Alla V. & Menkhaus, Dale J. & Phillips, Owen R. & Esipov, Victor E., 2003. "Non-performance risk and transaction costs in laboratory forward and spot markets," Journal of Comparative Economics, Elsevier, vol. 31(2), pages 257-274, June.
    9. Jeryl L. Mumpower & Jim Sheffield & Thomas A. Darling & Richard G. Milter, 2004. "The Accuracy of Post-Negotiation Estimates of the Other Negotiator's Payoff," Group Decision and Negotiation, Springer, vol. 13(3), pages 259-290, May.
    10. Phillips, Owen R. & Menkhaus, Dale J., 2006. "The Culture of Private Negotiation: Price Drift in Bilateral Bargaining," 2006 Annual meeting, July 23-26, Long Beach, CA 21168, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    11. Amy M. Nagler & Dale J. Menkhaus & Christopher T. Bastian & Nicole S. Ballenger & Erik O’Donoghue & C. Edwin Young, 2009. "Are Production Decisions Decoupled under a Bond Scheme? Experimental Evidence," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 31(2), pages 222-230.
    12. C. Duke & L. Gangadharan, 2005. "Salinity in Water Markets : An ExperimentalInvestigation of the Sunraysia Salinity Levy, Victoria," Department of Economics - Working Papers Series 950, The University of Melbourne.
    13. Bottom, William P., 1998. "Negotiator Risk: Sources of Uncertainty and the Impact of Reference Points on Negotiated Agreements," Organizational Behavior and Human Decision Processes, Elsevier, vol. 76(2), pages 89-112, November.
    14. Henrik Kristensen & Tommy Gärling, 2000. "Anchor Points, Reference Points, and Counteroffers in Negotiations," Group Decision and Negotiation, Springer, vol. 9(6), pages 493-505, November.
    15. Terry E. Daniel & James E. Parco, 2005. "Fair, Efficient and Envy-Free Bargaining: An Experimental Test of the Brams-Taylor Adjusted Winner Mechanism," Group Decision and Negotiation, Springer, vol. 14(3), pages 241-264, May.
    16. Chmielecki Michał, 2020. "Cognitive Biases in Negotiation - Literature Review," Journal of Intercultural Management, Sciendo, vol. 12(2), pages 31-52, June.
    17. Shanley, James & Grossman, Philip J., 2007. "Paradise to parking lots: Creation versus maintenance of a public good," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 36(4), pages 523-536, August.
    18. repec:cup:judgdm:v:3:y:2008:i:7:p:512-527 is not listed on IDEAS
    19. Menkhaus, Dale J. & Yakunina, Alla V. & Phillips, Owen R., 2001. "Bilateral Trading And The Curse Of Knowledge: An Experimental Economics Study," 2001 Annual Meeting, July 8-11, 2001, Logan, Utah 36127, Western Agricultural Economics Association.
    20. Jonathan Shalev, 2002. "Loss Aversion and Bargaining," Theory and Decision, Springer, vol. 52(3), pages 201-232, May.
    21. Van Poucke, Dirk & Buelens, Marc, 2002. "Predicting the outcome of a two-party price negotiation: Contribution of reservation price, aspiration price and opening offer," Journal of Economic Psychology, Elsevier, vol. 23(1), pages 67-76, February.

    More about this item

    Keywords

    Negotiations; Matching; Laboratory experiments;
    All these keywords.

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jeborg:v:105:y:2014:i:c:p:178-190. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/jebo .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.