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Competition modulates buyers’ reaction to sellers’ cheap talk

Sander Onderstal et al.

Journal of Economic Behavior and Organization2026https://doi.org/10.1016/j.jebo.2025.107403article
AJG 3ABDC A*
Weight
0.50

Abstract

Sellers in real-estate markets, on internet platforms, in auction houses, and so forth, routinely make non-binding price requests. Using a laboratory experiment, we examine how competition moderates the way such cheap-talk communication affects trade between buyers and sellers. For bilateral trade, the literature has identified efficiency, anchoring, and granularity effects of cheap-talk communication on negotiation outcomes. Our results show that most of these effects survive with competition, although some become weaker. Our main findings are the following: (i) The ability of sellers to make non-binding price requests has a positive effect on efficiency in that it helps trading partners close marginal deals both in bilateral bargaining and in competition; (ii) Competition weakens the anchoring effect of the level of the price request; (iii) Sellers communicating more granular price requests attract more granular buyer bids; (iv) The granularity of the seller’s price request does not impact the selling price.

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https://doi.org/https://doi.org/10.1016/j.jebo.2025.107403

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@article{sander2026,
  title        = {{Competition modulates buyers’ reaction to sellers’ cheap talk}},
  author       = {Sander Onderstal et al.},
  journal      = {Journal of Economic Behavior and Organization},
  year         = {2026},
  doi          = {https://doi.org/https://doi.org/10.1016/j.jebo.2025.107403},
}

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Competition modulates buyers’ reaction to sellers’ cheap talk

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Evidence weight

0.50

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.50 × 0.4 = 0.20
M · momentum0.50 × 0.15 = 0.07
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.