We use experimental techniques to compare first-price auctions to a common but previously unexamined exchange process that we term "multilateral negotiations." Initially, we find that transaction prices are statistically indistinguishable in the two institutions with four sellers, but that prices are higher in multilateral negotiations than in first-price auctions with two sellers. Surprisingly, we find in two-seller environments that a history of multilateral negotiations leads to higher auction prices, which suggests that buyers may see little price effect by moving from negotiations to auctions.
ACM SIGecom Exchanges – Association for Computing Machinery
Published: Jun 1, 2000