429 research outputs found

    Intimidation or Impatience? Jump Bidding in On-line Ascending Automobile Auctions

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    We run a large field experiment with an online company specializing in selling used automobiles via ascending auctions. We manipulate experimentally the maximum amount which bidders can bid above the current standing price, thus affecting the ease with which bidders can engage in jump bidding. We test between the intimidation vs. costly bidding hypotheses of jump bidding by looking at the effect of these jump-bidding restrictions on average seller revenue. We find evidence consistent with costly bidding in one market (Texas), but intimidation in the other market (New York). This difference in findings between the two markets appears partly attributable to the more prominent presence of sellers who are car dealers in the Texas market.

    Buy-it-Now Prices in eBay Auctions-The Field in the Lab

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    This article is an experimental investigation on decision making in online auction markets. We focus on a widely used format, the Buy-It-Now auction on eBay, where sellers post prices at which buyers can purchase a good prior to an auction. Even though, buyer behavior is well studied in Buy-It-Now auctions, up to date little is known about the behavior of sellers. In this article, we study how sellers set Buy-It-Now prices by combining the use of a real online auction market (the eBay platform and eBay traders) with the techniques of lab experiments. We find a striking relation between information about agents provided by eBay and their behavior. Information about buyers is correlated with their deviation from true value bidding. Sellers respond strategically to this information when deciding on their Buy-It-Now prices. Our results highlight consequences of information publicly available in (online) markets and underline the crucial role of institutional details.Electronic markets, experience, online auctions, BIN price, buyout price, risk, single item auction, private value, experiment

    EPA's New Emissions Trading Mechanism: A Laboratory Evaluation

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    The EPA has designed a new call auction institution for trading allowances to emit sulfur dioxide. This paper reports twelve laboratory markets that investigate trader behavior in this new institution and evaluate its performance relative to the more commonly observed uniform price call market. We find that the uniform price call market (1) is more efficient, (2) induces more truthful revelation of underlying values and costs, (3) provides more accurate price information, and (4) is more responsive to and recovers more quickly from changes in underlying market conditions. All of these differences result from the intense strategic manipulation incentives of the EPA auction. Under -the EPA auction rules both buyers and sellers misrepresent their true value of the emission permits, which biases market-clearing prices downwards. This suggests that the EPA auction will provide poor price signals to the evolving allowance market

    Multi-round auctions for institutional real estate assets : theory and practice

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    Thesis (S.M.)--Massachusetts Institute of Technology, Dept. of Architecture, 2003.Includes bibliographical references.The theory of auctions has grown dramatically over the last four decades; it offers guidance and insights into the conduct of efficient and optimal auctions in real estate, and other industries. In this thesis an auction process used to sell institutional real estate assets in the US is identified. This auction came into being during the 1990s, and is now in common use. The auction is recorded though surveys with industry representatives and is characterized. Problems with the auction are identified, and solutions are proposed, referencing this auction to the body of auction theory. The auction consists of two rounds of sealed bid submissions, with attrition in the number of competitive bidders. After competitive bidding is complete a preferred bidder is selected, and engages in due diligence, a practice that often uncovers new information and induces renegotiation. Bids are not binding during the bidding process, because the auction is informationally incomplete. Sellers analyze bids based on the perceived quality of the bidder as a contractual partner, as well as the bid's value, complicating the objective selection of the best bidder. The auction is bilaterally incomplete and unstable, potentially influencing efficiency and optimality. Recommendations to improve the process are made. Descriptive statistics are formed and presented of multi-round auctions for institutional real estate assets.by J. Aidan Foley.S.M

    The Dynamics of Seller Reputation: Theory and Evidence from eBay

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    We propose a basic theoretical model of eBay's reputation mechanism, derive a series of implications and empirically test their validity. Our theoretical model features both adverse selection and moral hazard. We show that when a seller receives a negative rating for the first time his reputation decreases and so does his effort level. This implies a decline in sales and price; and an increase in the rate of arrival of subsequent negative feedback. Our model also suggests that sellers with worse records are more likely to exit (and possibly re-enter under a new identity), whereas better sellers have more to gain from buying a reputation' by building up a record of favorable feedback through purchases rather than sales. Our empirical evidence, based on a panel data set of seller feedback histories and cross-sectional data on transaction prices collected from eBay is broadly consistent with all of these predictions. An important conclusion of our results is that eBay's reputation system gives way to strategic responses from both buyers and sellers.

    Joint Opaque booking systems for online travel agencies

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    This paper analyzes the properties of the advanced Opaque booking systems used by the online travel agencies in conjunction with their traditional transparent booking system. In section 2 we present an updated literature review. This review underlines the interest and the specicities of Opaque goods in the Tourism Industry. It also characterizes properties of the Name-Your-Own-Price (NYOP) channel introduced by Priceline and oering probabilistic goods to potential travelers. In the section 3 of the paper we present a theoretical model, in which we wonder what kind of Opaque system can be implemented by a given online monopoly. We compare the "Opaque \Hotwire system", a NYOP system without any possibility of rebidding and the joint implementation of these two systems. We nd that the NYOP system and the joint implementation can have challenging properties if consumer's information is complete. Then, in section 4, we analyze the case of incomplete information. We develop an appropriate setting to integrate the lack of complete information of potential passengers on their relative propensity to pay. We analyze three cases corresponding to dierent levels of uncertainty and number of tickets available. We nd that in some relevant cases (average number of tickets, moderate uncertainty), the joint implementation of 2 dierent Opaque booking systems is advantageous for the Online travel Agencies (OTAs) and airlines. This result casts doubt on the current OTAs' strategies.Opaque Selling, Name-Your-Own-Price, Economics of Tourism, Online Travel Agencies, Probabilistic Goods.

    eWOM: the effects of online consumer reviews on purchasing decision of electronic goods

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    Internet has become the primary source of information for a large number of consumers and it has dramatically changed the consumer behaviour. One of the main changes in modern consumer behaviour has been the transition from a passive to an active and informed consumer. Internet enables customers to share their opinions on, and experiences with, goods and services with a multitude of other consumers. Online consumer reviews are used by prospective buyers of related products who are interested in obtaining more information from people who have purchased and used a product of interest. Word-of-mouth (WOM) is one of the most important information sources when a consumer is making a purchase decision. The arrival and expansion of the Internet has extended consumers' options for gathering product information by including other consumers' comments, posted on the Internet, and has provided consumers opportunities to offer their own consumption-related advice by engaging in electronic word-of-mouth (eWOM). eWOM can be defined as all informal communications directed at consumers through Internet-based technology related to the usage or characteristics of particular goods and services, or their sellers. The aim of this study is to assess the impact of, one type of electronic word-of-mouth (eWOM), the online consumer review, on purchasing decision of electronic products. This empirical study also focuses on the relationship between reviews and purchasing behaviour. An instrument was prepared to measure the proposed constructs, with questionnaire items taken from prior studies but adapted to fit the context of e-commerce. The survey was applied to academicians in Turkey through internet. The data was analyzed using the SPSS package. The results show that consumer reviews have a causal impact on consumer purchasing behaviour and they have an effect on choosing the products by consumer. Finally, the results and their implications are discussed

    Experimental Economics

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    This is the first comprehensive treatment of laboratory experiments designed to evaluate economic propositions under carefully controlled conditions. While it acknowledges that laboratory experiments are no panacea, it argues cogently for their effectiveness in selected situations. Covering methodological and procedural issues as well as theory, Experimental Economics is not only a textbook but also a useful introduction to laboratory methods for professional economists. The emphasis is on organizing and evaluating existing results. The book can be used as an anchoring device for a course at either the graduate or advanced undergraduate level. Applications include financial market experiments, oligopoly price competition, auctions, bargaining, provision of public goods, experimental games, and decision making under uncertainty. The book also contains instructions for a variety of laboratory experiments.laboratory experiments, financial markets, price competition, auctions, bargaining, games, decision making, uncertainty
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