797 research outputs found
Buy it now: A hybrid market institution
This paper analyzes seller choices and outcomes in approximately 700 Internet auctions of a relatively homogeneous good. The âBuy it Nowâ option allows the seller to convert the auction into a posted price market. We use a structural model to control for the conduct of the auction as well as product and seller characteristics. In explaining seller choices, we find that the âBuy it Nowâ option was used more often by sellers with higher ratings and offering fewer units; and posted prices were more prevalent for used items. In explaining auction outcomes, we find that auctions with a âBuy it Nowâ price had higher winning bids, ceteris paribus, whether or not the auction ended with the âBuy it Nowâ offer being accepted, possibly reflecting signaling or bounded rationality. We also find that posting prices, by combining âBuy it Nowâ and an equal starting price, was an effective strategy for sellers in the sample.Market institutions; posted prices; auctions; e-commerce
Seller strategies on eBay: Does size matter?
We examine seller strategies in 1177 Internet auctions on eBay, to understand the diversity of strategies used, and their impacts. Dimensions of strategic choice include the use of a âBuy it Nowâ option, the level of the starting price, and the use of a secret reserve price. A major focus of our analysis is on differences across sellers with different volumes of sales. The largest volume sellers (termed âretailersâ) in our sample employ uniform selling strategies, but lower volume sellers exhibit a wide variety of strategic choices. While some components of sellersâ strategies appear important in raising seller revenue, including starting the auction with a âBuy it Nowâ offer, the overall impact of seller strategy choices on the outcome appears to be quite small. We interpret this as evidence for the competitiveness of the online auction market for frequently traded items with conventional retail alternatives. An exception is provided by the use of a secret reserve price, which raises the winning bid conditional on a sale, but reduces the probability of a sale. Depending on sellersâ risk aversion and impatience, this may also be an efficient outcome
The Dynamics of Seller Reputation: Theory and Evidence from eBay
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.
Seller strategies on eBay: Does size matter?
We examine seller strategies in 1177 Internet auctions on eBay, to understand the diversity of strategies used, and their impacts. Dimensions of strategic choice include the use of a âBuy it Nowâ option, the level of the starting price, and the use of a secret reserve price. A major focus of our analysis is on differences across sellers with different volumes of sales. The largest volume sellers (termed âretailersâ) in our sample employ uniform selling strategies, but lower volume sellers exhibit a wide variety of strategic choices. While some components of sellersâ strategies appear important in raising seller revenue, including starting the auction with a âBuy it Nowâ offer, the overall impact of seller strategy choices on the outcome appears to be quite small. We interpret this as evidence for the competitiveness of the online auction market for frequently traded items with conventional retail alternatives. An exception is provided by the use of a secret reserve price, which raises the winning bid conditional on a sale, but reduces the probability of a sale. Depending on sellersâ risk aversion and impatience, this may also be an efficient outcome.Internet auctions; posted prices; market institutions
Engineering Trust - Reciprocity in the Production of Reputation Information
Reciprocity in feedback giving distorts the production and content of reputation information in a market, hampering trust and trade efficiency. Guided by feedback patterns observed on eBay and other platforms we run laboratory experiments to investigate how reciprocity can be managed by changes in the way feedback information flows through the system, leading to more accurate reputation information, more trust and more efficient trade. We discuss the implications for theory building and for managing the redesign of market trust systems.market design, reputation, trust, reciprocity, eBay
Exploring Information Disclosure In Online Auctions
This research examines how a sellerâs reputation score and auction pre-configuration affects peopleâs participation in communication within online auction communities. A leading horizontal intermediary auction platform is used to conduct this research. Its seller âfeedbackâ mechanism and âask seller a questionâ forum are chosen as representatives of post- and intra-transactional information disclosure. A self-developed classification approach is used to classify the buyer-initiated questions. The results of multinomial logistic regression indicate that product quality, shipment and payment issues are aspects that concern buyers the most in the early stages of an auction. Subsequently, their attention is likely to shift to seller credibility and price negotiations as listing durations get longer. In terms of the influ- ence of seller feedback ratings, our findings suggest that lower-rated traders are more likely to be asked questions about product description and seller credibility. Buyer concern about seller uncertainty is only alleviated if the seller has a good reputation. Even medium-rated sellers are suspected of being opportunistic. Moreover, buyers are more willing to discuss transaction-related issues and raise negotiation-associated questions with sellers who have already achieved high reputation scores. Finally, the theoretical and managerial implications are elaborated
Country-Specific Effects of Reputation and Information: A Comparison of Online Auctions in Germany, the UK, and the US
Empirical studies on the effect of sellersâ reputation on closing prices in online auctions present mixed results. A large number of studies addresses reputational effects in one country, especially in the US. Only a small number of cross-country studies inspect the moderating role of institutional frameworks on bidder behavior. The purpose of this paper is to examine if country-specific differences in the formal and informal institutional framework influence the effects of reputation and information signals on final prices in online auctions. From the perspective of the New Institutional Economics, management decisions and individualsâ characteristics are affected by the institutional framework, which consists of cultural aspects as well as a set of social and legal rules and regulations. Therefore, bidders that are influenced by one institutional framework have different preferences, expectations, and perceptions about reputation and information in online auctions than individuals socialized by another institutional framework. In order to examine the effects of reputation and information on prices as well as to asses cross-country similarities and differences in these effects, a sample of 6,166 homogenous online auctions, conducted on the respective eBay websites in Germany, the UK, and the US, is analyzed. The results suggest that either the effects of reputation and product information variables vary significantly across countries or that different variables have an impact on prices in different countries. It can be concluded that country-specific institutional frameworks influence bidder behavior in international online auction markets.reputation, information, online auctions, cross-country studies
E-loyalty networks in online auctions
Creating a loyal customer base is one of the most important, and at the same
time, most difficult tasks a company faces. Creating loyalty online (e-loyalty)
is especially difficult since customers can ``switch'' to a competitor with the
click of a mouse. In this paper we investigate e-loyalty in online auctions.
Using a unique data set of over 30,000 auctions from one of the main
consumer-to-consumer online auction houses, we propose a novel measure of
e-loyalty via the associated network of transactions between bidders and
sellers. Using a bipartite network of bidder and seller nodes, two nodes are
linked when a bidder purchases from a seller and the number of repeat-purchases
determines the strength of that link. We employ ideas from functional principal
component analysis to derive, from this network, the loyalty distribution which
measures the perceived loyalty of every individual seller, and associated
loyalty scores which summarize this distribution in a parsimonious way. We then
investigate the effect of loyalty on the outcome of an auction. In doing so, we
are confronted with several statistical challenges in that standard statistical
models lead to a misrepresentation of the data and a violation of the model
assumptions. The reason is that loyalty networks result in an extreme
clustering of the data, with few high-volume sellers accounting for most of the
individual transactions. We investigate several remedies to the clustering
problem and conclude that loyalty networks consist of very distinct segments
that can best be understood individually.Comment: Published in at http://dx.doi.org/10.1214/09-AOAS310 the Annals of
Applied Statistics (http://www.imstat.org/aoas/) by the Institute of
Mathematical Statistics (http://www.imstat.org
How Buyer Experience in Online Auctions Affects the Dimensionality of Trust in Sellers: An Unexpected Finding
In commercial transactions, trust in sellers (TIS) is the degree of trust that buyers bestow upon sellers. The existence and level of TIS is obviously a factor determining whether buyers will buy. TIS is particularly important in consumer-to-consumer e-commerce transactions, such as online auctions, which are characterized by anonymity and asymmetric product quality information. Given the importance of TIS, the dimensionality of the construct was investigated using confirmatory factor analysis, employing buyer experience as a mediator. The expectation was that experienced subjects (subjects who have made a bid) would have a more detailed, differentiated conceptualization of TIS than inexperienced subjects (subjects who have never bid before), but the opposite was found. This is tentatively ascribed to the halo/horns effect, well-known from the performance appraisal literature. The managerial implications of this result, its possible effects on buyers\u27 purchase intentions, and directions for future research are discussed
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