How timing in bargaining strategies on eBay can save money

Bargaining data from eBay reveals that slower seller response times to offers could indicate proximity to an acceptable price point. However, buyers often misinterpret these delays as negative signals, according to a recent study.

Proceedings of the National Academy of Sciences analyzed how response timing affects bargaining outcomes on an e-commerce platform.

"The finding adds a new element to game theory — the scientific study of strategic interactions—by considering not just what people choose, but how quickly they choose it," said University of California, Los Angeles psychology professor Ian Krajbich, the study's corresponding author.

The analysis showed that sellers who took longer to reject initial offers were more likely to accept subsequent offers from buyers. However, buyers typically responded counterintuitively to these delayed rejections by becoming less likely to submit follow-up offers.

Researchers, led by Miruna Cotet from Complexity Science Hub Vienna, who conducted the work while at Ohio State University, utilized eBay data from 2012 and 2013. The team supplemented their analysis by creating test accounts to make thousands of offers to hundreds of sellers, specifically targeting collectible items such as Pokémon and baseball cards.

The study found that sellers consistently took more time to reject offers that were closer to their desired price point and less time to reject offers that were far from acceptable. The correlation was strong enough that researchers could predict whether a seller would accept a second offer based on their response time to the first offer.

"But what is maybe most surprising in these results is that buyers do not seem to be using this information as strategically as they should," Krajbich said. "Buyers seem to be discouraged by slow responses from the seller. The slower the sellers were to reject them, the less likely buyers were to make another offer. In fact, buyers were more likely to make second offers to sellers who had slapped them down quickly."

The research team examined multiple aspects of buyer behavior following rejected offers. They found no evidence that slow rejections led buyers to switch to other sellers, use the "buy it now" option, or abandon their purchasing intentions.

The study introduces new considerations to traditional game theory by examining how decision-making speed can reveal information about private preferences. In situations where sellers must make decisions without predetermined plans, their response time can inadvertently signal how close an offer is to their acceptable price range, according to the study.

The data analysis covered various sales categories on eBay's platform, where sellers can list items at fixed prices while allowing buyers to make offers. The platform's "best offer" system enables buyers to submit offers that sellers can accept or reject, with buyers having the option to make multiple offers or purchase items outright at the listed price.

In their experimental phase, researchers made 10 to 20 offers to each seller in their test group, focusing on collectible cards to maintain consistency across transactions. This controlled testing supported the findings from the broader eBay dataset analysis.

Both the eBay and experimental data demonstrated that sellers were slower to reject better offers and faster to reject worse offers. The longer the seller's rejection time to the first offer, the more likely they were to accept the buyer's second offer.

According to Krajbich, sellers who respond slowly may inadvertently drive away buyers, while buyers who do not follow up with slow-responding sellers might miss out on potential deals.

The results came from both past eBay transaction data and controlled experimental offers. This gave more than one piece of evidence to support the idea that response time affects how well an offer is accepted in online negotiations.

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