The process of reaching an agreement in second-hand markets for consumer durables

In this paper, bargaining processes in the second-hand market for consumer durables will be investigated. The principal aim of this study is to empirically estimate the predicted negotiated price, based on the reservation prices and the corresponding probabilities of reaching an agreement as perceived by the potential buyers and sellers. To predict the outcome of the bargaining process, we distinguish two curves: the buyers' curve, which shows the buyers' perceived probabilities of prices acceptable to the seller(s) and the sellers' curve, which does likewise for the sellers. The intersection point of these two curves indicates the predicted price at which the joint probability of reaching an agreement is at a maximum. Alternatively, a predicted price has been computed from the intersection of the cumulative distributions of buyers' and sellers' reservation prices, Finally, the predicted prices of different types of second-hand goods are compared to the prices realized on the market, called observed prices.