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DR@W Forum Online: Arkady Konovalov (Zurich)
We often use choices, which are typically discreet, to infer preferences. The choice process also produces decision times (or response times, RTs), which are continuous and often can be easily observed. Using three individual choice tasks, we show that RTs, which typically peak at indifference, can supplement choices to infer individual preferences, and can be used to recover individual utility functions in the absence of choice data. This begs the question of whether other individuals can exploit this information. In two bargaining experiments, we find that buyers tend to quickly reject unreasonably high prices, but take more time to respond to offers that are close to their valuation. This allows sellers to infer buyers’ values from observable RTs, creating an incentive for buyers to manipulate their RT. These phenomena have important implications for economic interactions, especially in online environments.