Intermediaries in Bargaining: Evidence from Business-to-Business Used-Car Inventory Negotiations
We analyze data on tens of thousands of alternating-offer, business-to-business negotiations in the wholesale used-car market, with each negotiation mediated (over the phone) by a third-party company. The data shows the identity of the employee mediating the negotiations. We find that who intermediates the negotiation matters: high-performing mediators are 22.03% more likely to close a deal than low performers. Effective mediators improve bargaining outcomes by helping buyers and sellers come to agreements faster, not by pushing disagreeing parties to persist, and have real effects on efficiency for some negotiations, overcoming some of the inefficiency inherent in incomplete-information settings.
An earlier version of this study was circulated under the title, “Mediation in Bargaining: Evidence from Large-Scale Field Data on Business-to-Business Negotiations.” We thank Rebecca Li for outstanding research assistance, as well as Jack Fanning, Matt Grennan, Nagore Iriberri, Pranav Jindal, Bruno Pellegrino, Joris Pinske, Renan Yoshida, Xingtan Zhang, and seminar and conference participants at the University of Toronto, Shanghai Jiao Tong University, University of Chicago, Queens University, Penn State University, Stanford-Berkeley IO Fest, the North America Winter Meetings of the Econometric Society, the European Winter Meetings of the Econometric Society, IIOC 2021, and BEET 2021 (Bargaining: Experiments, Empirics, and Theory). We acknowledge support from the National Science Foundation through grants SES-1629060 and SES-1530632. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.