SBEE Seminar Series: Ian Krajbich

Decision Times Reveal Private Information in Strategic Settings: Evidence from Bargaining in the Lab and on eBay 

Abstract: 

People naturally respond quickly when they have a clear preference and slowly when they are close to indifference. Thus, response time (RT) has the potential to betray private information in strategic situations. The question is whether the relation between strength-of-preference and RT persists in market settings, and if so, how others respond to it. In two-stage laboratory bargaining experiments, Krajbich and collaborators observe that the speed with which buyers reject sellers’ first-stage offers decreases with the size of the immediate foregone surplus. This should allow sellers to infer buyers’ values from their RT, creating an incentive for buyers to manipulate their RT. Krajbich's team experimentally identify distinct conditions under which subjects do, and do not, exhibit such strategic behavior. Going beyond the lab, they address this question using a dataset consisting of millions of bargaining exchanges from eBay. They find that the time it takes sellers to accept or reject offers is strongly related to the size of the offer. These RT differences are on the order of hours. These findings apply to a majority of the exchanges on eBay, and are even stronger with more experienced sellers. Overall, these results indicate that there is information in RT data, and that a majority of agents do not have prepared strategies but instead evaluate offers on the spot in a way that reveals their values for the goods. 

Speaker bio: 

Ian Krajbich is a neuroeconomist with a background in both the social sciences and neuroscience. His research combines tools from psychology, neuroscience and economics to investigate the mechanisms behind decision-making. He works in a very interdisciplinary lab interested both in using economic tasks and theory to better understand cognitive neuroscience, and in using models and measures from cognitive neuroscience to do better economics.

Ian obtained his B.S. in Physics and Business Economics at Caltech, then stayed at Caltech do his M.Sc. in Social Sciences and Ph.D. in Behavioral and Social Neuroscience with Antonio Rangel, Colin Camerer, Ralph Adolphs and John Ledyard. He was then a Postdoc for one year with Antonio Rangel and Colin Camerer, followed by two years with Ernst Fehr at the University of Zurich.

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