Experimental Design Workshop - Incite at Columbia University

Join us for a workshop presentation. This event is free and open to the public.

Do Bargaining Heuristics Matter? Evidence from Buyer-Seller Bargaining Interactions in Housing Market

This paper examines people’s round number heuristics in the bargaining process on the US housing market using confidential data that contains detailed bargaining behaviors of US home buyers and sellers. We find that both buyers’ offer prices and sellers’ (revised) listing prices cluster at psychologically salient round numbers. When sellers use round numbers as initial listing prices, buyers are also more likely to use round numbers as their offer prices and make a larger adjustment in the bargaining process. Consistent with the cheap talk hypothesis, a round number listing price is significantly correlated with a lower final sales price and less time on the market. We run a complementary experimental study with real home sellers and buyers to establish causality and test the relevant mechanisms that explain these behaviors.

Franklin Qian is currently an assistant professor at the University of North Carolina's Finance Department. His research focuses on policy evaluations in the real estate market. Franklin earned his PhD in economics at Stanford University in 2021.

Ye Zhang is currently an assistant professor at the Stockholm School of Economics Finance Department. Her research focuses on designing experiments in various financial markets. Ye earned her PhD in economics at Columbia University in 2021.

Tianxiang Zheng is currently a PhD candidate at the Economics Department of the University of College London.

Haaris Mateen is currently a PhD candidate at the Economics Department of Columbia University.

About the Experimental Design Workshop

The workshop gives social scientists the opportunity to workshop the design of an experiment they have not yet fielded. Graduate student and faculty presenters will present their designs and receive specific, actionable feedback from other workshop participants. A list of our previous sessions can be found here.

For inquiries or if you are interested in joining the workshop's email list, please contact Daniel Tadmon (daniel.tadmon@columbia.edu) or James Chu (jyc2163@columbia.edu).

Funding support for the Experimental Design Workshop is provided by the Paul F. Lazarsfeld Lecture Series, administered by Incite, which features events and programming that embody and honor Lazarsfeld’s commitment to the improvement of methodological approaches that address concerns of vital cultural and social significance.