Access Restriction

Author Bajari, Patrick ♦ Hortaçsu, Ali
Source CiteSeerX
Content type Text
File Format PDF
Language English
Subject Domain (in DDC) Computer science, information & general works ♦ Data processing & computer science
Subject Keyword Online Auction ♦ Representative Auction ♦ Book Value ♦ Online Bidding ♦ Expected Number ♦ Observed Bidding Behavior ♦ Bidder Increase ♦ Electronic Commerce ♦ Main Issue ♦ Empirical Insight ♦ New Technique ♦ Endogenous Entry ♦ Low Minimum Bid ♦ Widespread Popularity ♦ Ebay Coin Auction ♦ Common Value Auction Model ♦ Reserve Price ♦ Winner Curse ♦ Seller Choice ♦ First Approximation ♦ Costly Entry ♦ Successful Form ♦ Ebay Auction ♦ Key Component
Description Online auctions have recently gained widespread popularity and are one of the most successful forms of electronic commerce. We examine a dataset of eBay coin auctions to explore features of online bidding and selling behavior. We address three main issues. First, we measure the extent of the winner’s curse. We find that for a representative auction in our sample, a bidder’s expected profits fall by 3.2 percent when the expected number of bidders increases by one. Second, we document that costly entry is a key component in understanding observed bidding behavior. For a representative auction in our sample, a bidder requires $3.20 of expected profit to enter the auction. Third, we study the seller’s choice of reserve prices. We find that items with higher book value tend to be sold using a secret as opposed to posted reserve price with a low minimum bid. We find that this is, to a first approximation, consistent with maximizing behavior. We also develop new techniques for structurally estimating common value auction models.
Educational Role Student ♦ Teacher
Age Range above 22 year
Educational Use Research
Education Level UG and PG ♦ Career/Technical Study
Learning Resource Type Article
Publisher Date 2000-01-01