Nicolas Eschenbaum
Last Name
Eschenbaum
First name
Nicolas
Email
nicolas.eschenbaum@unisg.ch
Phone
+41 71 224 3088
Web Site
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Item type:Publication, Dynamic Pricing in Bilateral Relationships: Experimental Evidence(2024-07-12); ; This paper provides experimental evidence on dynamic pricing in finite-horizon bilateral relationships, building on Hart and Tirole's (1988) canonical analysis. We study four different treatments that vary with respect to the seller's commitment ability and the mode of trade. For the sale without commitment model, we find that mean prices are gradually declining, which is in line with theory. Profits are similar to the sale with commitment model, where sellers leave a substantial rent to buyers. For the rental without commitment model, mean prices are higher than predicted and non-increasing toward the end of the horizon. For the rental with commitment model, mean prices are lower than predicted and essentially flat. Overall, we find that theory does a fairly good job at predicting mean prices but cannot capture the diverse patterns of individual price paths observed within relationships.Type:working paper