Levmore and Porat, ‘No-Haggle Agreements’

Some buyers might prefer not to haggle either because they recognize that the seller they face is likely to be a superior bargainer or because it is easier to comparison shop when prices are known and do not require an investment in transaction costs. Sellers, in turn, might appeal to these buyers by promising a no-haggle environment. In some settings, sellers can go further by promising individual buyers that they will not haggle. These buyers might then engage in one round of haggling, stating a price which the seller agrees to accept or reject, with no further possibility of negotiation. Such buyers might be more confident of getting better offers from agreeable sellers. We describe why and when such a process might be attractive, and suggest a legal remedy that makes it possible. This no-haggle process might be attractive to some repeat sellers when dealing with occasional buyers, and might often be attractive to one-time sellers and buyers, as in the case of many real estate negotiations.

Levmore, Saul and Porat, Ariel, No-Haggle Agreements (March 4, 2015).

First posted 2015-03-08 08:23:57

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