New research shows that the time people take to decide whether to accept or reject an offer can help bargain hunters track down the best deal.
'Manipulating' Response Times may help bargain hunters get a better deal
How much time bargainers take deciding whether to accept or reject an offer can reveal how much they think an item is worth – a discovery which may help online bargain hunters get the best deal.
Researchers have discovered that people purchasing consumer goods, such as bikes, televisions and washing machines may be slow to accept low value goods or items with high prices but would act swiftly when the value is high or the price low.
Publishing their findings today in Economic Journal, experts from the University of Birmingham and University of California Los Angeles (UCLA), USA, reveal that savvy buyers or sellers may be able to manipulate their response times (RT) to get a better deal when negotiating their online transactions.
If someone hesitates when you are offering them a price for a bike you are selling, you might infer that they are willing to pay a price close to what you are offering.If someone hesitates when you are offering them a price for a bike you are selling, you might infer that they are willing to pay a price close to what you are offering.
In experiments, buyers speeded up their rejections when they knew their RTs were being observed - indicating that RTs convey useful information, even when they are a strategic element of the bargaining process.
Co-author Arkady Konovalov, from the University of Birmingham, commented: “If someone hesitates when you are offering them a price for a bike you are selling, you might infer that they are willing to pay a price close to what you are offering.
“A strategic buyer may try to reject quickly, signalling less interest in the goods, but a quick acceptance may reveal to the seller that they could have set a higher price and still made the sale.
“What makes RT particularly interesting is that it’s a natural by-product of the decision process and manipulating it is not without consequences. When ‘deciding how to decide’, buyers may erroneously accept a ‘bad’ offer or reject a ‘good’ offer by speeding up their decision-making.”
The researchers conducted several experiments, using bargaining simulations where buyers and sellers interacted with each other – with and without access to information on RTs. They also conducted a survey which posed the key question: ‘If you bargain, what do you pay attention to when bargaining?’ with nearly half of respondents saying they paid attention to timing.
The experts note that evidence points to people considering RTs as an important factor when evaluating moral character, job offers and housing offers among other transactional situations.
Co-author Ian Krajbich, from Ohio State University (now at UCLA), commented: “Those who are attuned to RT may gain a strategic advantage over those who are not. It may be beneficial to conceal response time – for example, an employer might not want to reveal their interest in a candidate (which would give the candidate an upper hand in the salary negotiations), and so the employer might announce the date of their decision in advance.”
“Speeding up is not the only way to manipulate RT - a chess or poker player in a strong position might not want to alarm their opponent by moving too quickly, whilst in dating, it is common advice not to follow up too quickly after the first date, to avoid looking desperate.”
For more information, please contact Tony Moran, International Communications Manager, University of Birmingham on +44 (0)782 783 2312 or pressoffice@contacts.bham.ac.uk. For out-of-hours enquiries, please call +44 (0) 121 414 2772.
The University of Birmingham is ranked amongst the world’s top 100 institutions, its work brings people from across the world to Birmingham, including researchers and teachers and more than 8,000 international students from over 150 countries.
Decision Times Reveal Private Information in Strategic Settings: Evidence from Bargaining Experiments - Arkady Konovalov and Ian Krajbich is published by Economic Journal.
Associate Professor
Arkady Konovalov is a neuroeconomist interested in studying individual and social decision making using models of the choice process and value-based learning at the University of Birmingham.
