Events

Prof. Jessica Fong
Assistant Professor of Marketing
Ross School of Business
University of Michigan

ABSTRACT

Delay in negotiations is common in many settings, but the effects of delay have rarely been studied empirically in the field. We measure the causal effect of delay using data from millions of negotiations on eBay. We find that for both buyers and sellers, the longer the bargaining party delays, the less likely the opponent is to continue the negotiation by countering. However, the downstream consequences vary. The more the seller delays, the more likely the negotiation will fail, but the more the buyer delays, the more likely the seller will accept the buyer’s offer. The effects of delay are robust; they exist even under short amounts of delay (under 6 hours) and for negotiations for low-priced goods. We find that these effects are consistent with models of strategic delay, in which delay acts as a signal of bargaining power.