Bart Wilson

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Squeezing Lemonade into Lemons
Bart Wilson George Mason University
Artie Zillante UNC Charlotte
July 1, 2007
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Experimental Design

• Institution/Information treatment variables
• Institution Bilateral bargaining vs. posted
  offer
• Information posted offer sessions
• Participants know all posted offers
• Sellers only see their private offers
• General session parameters
• 16 buyers, observe quality after purchase
• 4 sellers 2 low quality, 2 high quality
  (exogenous)

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Result 1 Market outcomes
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Result 2 Sales order
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Result 3 Forgone CS
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Result 4 Earnings
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Result 5 Advertising
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Conclusion

• Information matters
• Regular sellers in PO markets with public
  information sell ripoffs almost exclusively
• Super seller earnings are near zero in PO markets
  with public information
• Institution matters
• Bilateral bargaining allows super sellers to make
  more than minimal profits
• Reduces the number of ripoffs