Download This PaperWhen to Haggle
47 Pages Posted: 3 Oct 2001
Date Written: May 2001
Abstract
A seller faces a buyer with unknown reservation value. We show that buyer risk aversion can make it in the seller's interest to haggle. That is, the seller should make an initial offer and then, if it is rejected, make a second offer with some probability strictly less than one. This is true regardless of whether the seller haggles over price, quality, or price and quality simultaneously. The results are extended to contexts with multiple types of buyers and multiple dimensions for haggling.
Keywords: Economics, Microeconomics, Economics, Economic and Econometric Theory
Suggested Citation: Suggested Citation
Miller, Nolan and Piankov, Nikita Evgenjevich and Zeckhauser, Richard J., When to Haggle (May 2001). Available at SSRN: https://ssrn.com/abstract=284017 or http://dx.doi.org/10.2139/ssrn.284017
Do you have a job opening that you would like to promote on SSRN?
Feedback
Feedback to SSRN
If you need immediate assistance, call 877-SSRNHelp (877 777 6435) in the United States, or +1 212 448 2500 outside of the United States, 8:30AM to 6:00PM U.S. Eastern, Monday - Friday.