This paper investigates whether transactions where the buyer (or the seller) always moves first, and the seller (or the buyer) always moves second in the exchange gives higher payoffs than an exchange in which it is randomly determined who moves first.We examine the effect of two treatment variables: Partners versus Strangers and fixed versus changing positions.We do not find much economic justification for establishing fixed roles in exchange relationships.Both with fixed and with changing positions, second movers take advantage of their position by exploiting the first mover by "not delivering" the demanded good.In the fixed positions treatments, exploitation occurs significantly less while reciprocal exchanges happen more often.In spite of this, it turns out that with fixed positions payoffs are very unevenly distributed.Unequal payoff distributions occur both under Partners and Strangers, but they appear to be more extreme among Strangers.
|Place of Publication||Tilburg|
|Number of pages||29|
|Publication status||Published - 2000|
|Name||CentER Discussion Paper|