On the Strategic Use of Response Times
72 Pages Posted: 25 Aug 2017 Last revised: 28 Aug 2017
Date Written: August 27, 2017
People tend to respond quickly facing easy decisions and slowly facing difficult decisions. This begs the question of whether others can exploit this information. In a two-stage bargaining experiment, we find that buyers tend to quickly reject unreasonably high prices, but take more time to respond to offers that are close to their valuation. This allows sellers to infer buyers’ values from observable response times (RT), creating an incentive for buyers to manipulate their RT, which they do. These results provide the first insight into the possible use of RT as a strategic variable.
Keywords: Response Time, Bargaining, Behavioral, Game Theory
JEL Classification: C91, D01, D87
Suggested Citation: Suggested Citation