Seminar: Marco Castillo, Georgia Institute of Technology.

Title: A Field Experiment on Bargaining.

Abstract:

We investigate the presence of differential market outcomes by implementing a field bargaining experiment in a competitive environment. We exploit the existence of a large and widely used market where prices are settled by face-to-face negotiations: a taxi market. In our experiment, trained confederate buyers (passengers) were instructed to follow a simple bargaining strategy consisting of insisting on a maximum acceptable price until such price is accepted or rejected. This protocol allows sellers (drivers) to reveal their strategies by naming acceptable counteroffers and their willingness to compromise with different buyers. Initial price dynamics are consistent with attempts by sellers to screen buyers, and negotiations are more likely to continue with women than men. Women obtain better prices and are rejected less frequently. These results are puzzling because the set of buyers the seller will face following a failed negotiation is the same whether they reject a man or a woman. Our results are not due to selection issues or sellers obtaining more enjoyment out of providing services to one gender over the other. The differential treatment by sellers cannot be completely explained by the presence of discriminatory preferences.