Trading partner choice and bargaining culture in negotiations

In negotiated transactions the act of choosing trading partners and "who chooses" creates a bargaining culture that influences trading behavior. Results are presented from experimental markets in which paired buyers and sellers negotiate the repeated sale of units. Relative to a market environment in which traders are randomly matched, choosing a trading partner increases the number of units exchanged and lowers negotiated prices. Collective seller earnings suffer. Who does the choosing, that is, whether buyers select sellers or sellers select buyers, further impacts prices and therefore relative earnings. Those choosing tend to be disadvantaged. (C) 2014 Elsevier B.V. All rights reserved.