The Impact of Online Auction Duration (original) (raw)
Related papers
2012
In online auction research, sellers' and buyers' strategies have been largely examined as separate research streams and the interdependencies inherent in their strategies to understanding price premium and buyer behaviors have not been adequately explored. This deficiency is a serious limitation since an integrative approach could build the conceptual bridge necessary to provide sellers with a deeper understanding of how to achieve desired auction outcomes. Consequently, the present study integrates these two perspectives by proposing that seller auction duration strategy impacts bidders' strategy, their winning likelihood, and their financial outcomes. Results from cluster analysis and ANCOVA support our model, showing that different auction durations attract different types of bidders. Auctions with shorter durations were found more attractive to those buyers attempting to keep monitoring cost low, while longer durations appeared to be more attractive to those benefitting from observing other bidders' actions. The paper concludes with implications for research and practice.
Bidding behavior in dynamic auction settings: An empirical analysis of eBay
Electronic Commerce Research and Applications, 2010
We study the impact of dynamic features of eBay auctions on bidding behavior. Due to highspeed internet and practically costless search possibilities, bidding behavior is no longer a function of characteristics of a single auction but depends on auctions running simultaneously, completed auctions, available Buy-It-Now prices as well as various outside options. We study how this dynamic market affects a bidder's choice of participating in an auction or leaving eBay for an outside alternative. We analyze Texas Instruments (TI-83) Graphing Calculator auctions featured on eBay. We estimate a random-effects probit model to study bidders' probability of staying in eBay, while controlling for unobservable individual-specific heterogeneity. Our main result shows that market tightness -the ratio of bidders to sellershas a negative and significant effect on bidders' decision to remain in eBay. Moreover, variables containing information from other eBay auctions significantly affect bidders' participation decision, thus emphasizing the importance of the dynamic, multi-auction environment in eBay marketplace for potential buyers.
2012
ABSTRACT Online auctions differ from traditional auctions in several ways, but perhaps one of the most significant is the amount of time that bidders interact with the auction mechanism. This paper examines past findings in online auctions and discusses three psychological mechanisms through which bidders may increase their valuations of an item through interaction with the auction mechanism over time.
An empirical investigation into the structure of bidding in online auctions
Electronic Markets, 2005
The study maps the bidding patterns of 1,051 completed English auctions from the eBay website to study their structural patterns. The overall pattern appears to be a cubic. People initially bid the price to 60–70% of the final value. The price levels off only to take off near the end of the auction, when it reaches its final price. The second part of the study measures the effects of information on bidding. The effect of secret reserve price information on auctions is compared for differences in bidder participation and resultant final values. The results ...
Bidding Behavior and Dynamic Pricing in Markets with Auctions and Posted Prices
2010
This paper analyzes the impact of posted prices on bidders’ behavior in markets such as eBay, where buyers can purchase a product either by entering in an auction or buying from the traditional “Buy it Now” (posted price) seller. The econometric results and the theoretical model shows that the existence of a posted price option tends to change bidding behavior in second price auctions not only directly but also indirectly, through entry probabilities in the auction. In particular, from a theoretical perspective, when buyers’ valuation has a uniform distribution the effect of changes in the duration of the auction dominates the effect of the posted prices over entry probabilities. This means that by controlling auction duration the auctioneer has an important role in the game. These results can contribute to the discussion about bidding behavior in second price auctions – Ockenfels and Roth (2002), Bajari and Hortacsu (2003) and Nekipelov (2008).
A Field Study of the Effects of Minimum and Reserve Prices on Internet Auction Bids
In a field experiment, we investigated the impact of two value signals under the seller's control (i.e., presence or absence of a minimum bid and public reserve price) on the final amount bid for an item in an auction. Previous laboratory research suggests that when the value of an item is uncertain, the final amount bid is higher than when the value is more certain. We found that auctions with greater uncertainty (no price signal) lead to the highest mean final price. They also attracted the largest number of bidders, the greatest number of bids per bidder and the lowest initial (first) bid. The number of bidders mediated the effect of the absence of the price signal on the final auction outcome. Those results suggest that bidding attracted other bidders. In addition, the signal of higher value (the reserve price) had a greater influence over the outcome than the signal of lower value (the minimum bid) in that the presence of a reserve lead to similar outcomes regardless of the presence of a minimum bid. A significantly lower outcome occurred when the minimum bid was not accompanied by a reserve price.