The Effect of Environmental Risk on the Efficiency of Negotiated Transfer Prices
Bibliographic record
Abstract
ABSTRACT This study investigates whether environmental risk affects the efficiency of negotiated transfer prices. We analyze a setting where the buyer faces environmental risk but the seller does not. From the risk‐neutral firm's perspective, the transfer should be made in our setting because the expected value of the buyer's profit is greater than the certain opportunity cost of the seller from the transfer. We develop hypotheses to predict that, as environmental risk increases, it becomes more difficult for buyers and sellers to reach agreement. Such difficulty reduces efficiency in terms of both firm profit and negotiation time. We test our hypotheses via an experiment in which buyer and seller dyads negotiate over the transfer of a resource at six levels of environmental risk. Results show that, as predicted, environmental risk decreases efficiency. Specifically, as environmental risk increases, the frequency of agreement decreases, thereby reducing expected firm profit. Further, environmental risk increases negotiation time for those dyads that are able to reach an agreement. Data suggest that the cause of the decreased efficiency is that buyers and sellers use different reference points for determining a fair transfer price and environmental risk exacerbates the effects of such differences.
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How this classification was reachedexpand
Full frame distilled prediction
Teacher imitationNot calibrated prevalence, not ground truth. Human validation pending. Learned from the 10,348 direct Codex labels and 10,348 direct Gemma labels. Candidate is the union of thresholded teacher heads; consensus is their intersection. These outputs are machine_predicted_unvalidated and are not human labels or direct frontier model labels.
Codex and Gemma teacher scores by category
| Category | Codex | Gemma |
|---|---|---|
| Metaresearch | 0.008 | 0.001 |
| Meta-epidemiology (narrow) | 0.000 | 0.000 |
| Meta-epidemiology (broad) | 0.000 | 0.000 |
| Bibliometrics | 0.000 | 0.000 |
| Science and technology studies | 0.002 | 0.004 |
| Scholarly communication | 0.000 | 0.000 |
| Open science | 0.001 | 0.000 |
| Research integrity | 0.000 | 0.000 |
| Insufficient payload (model declined to judge) | 0.000 | 0.000 |
Machine scores (provisional)
The two teacher heads of the student model, read on this work. A score orders the frame for review; it never asserts a category, and the validation status ships verbatim with every row.
Baseline scores from an immature model (maturity gate not passed, 7 training rounds). Scores rank; they never assert a category.
score_only:v0-immature-baseline · verbatim from the scoring run: score_only means the number may rank works, and no category label ships from itClassification
machine, unvalidatedMachine predicted; both teacher heads agree on what is shown here.
How this classification was reached, model by model and score by score, is at the end of the page under "How this classification was reached".