Competition Between Auctions

Even though auctions are capturing an increasing share of commerce, they are typically treated in the theoretical economics literature as isolated. That is, an auction is typically treated as a single seller facing multiple buyers or as a single buyer facing multiple sellers. In this paper, we review the state of the art of competition between auctions. We consider three different types of competition: competition between auctions, competition between formats, and competition between auctioneers vying for auction traffic. We highlight the newest experimental, statistical and analytical methods in the analysis of competition between auctions

Competition Between Auctions

Even though auctions are capturing an increasing share of commerce, they are typically treated in the theoretical economics literature as isolated. That is, an auction is typically treated as a single seller facing multiple buyers or as a single buyer facing multiple sellers. In this paper, we review the state of the art of competition between auctions. We consider three different types of competition: competition between auctions, competition between formats, and competition between auctioneers vying for auction traffic. We highlight the newest experimental, statistical and analytical methods in the analysis of competition between auctions.auctions, bidding, competition, auction formats, auction houses

Economics, Psychology, and Social Dynamics of Consumer Bidding in Auctions

With increasing numbers of consumers in auction marketplaces, we highlight some recent approaches that bring additional economic, social, and psychological factors to bear on existing economic theory to better understand and explain consumers' behavior in auctions. We also highlight specific research streams that could contribute towards enriching existing economic models of bidding behavior in emerging market mechanisms.Peer Reviewedhttp://deepblue.lib.umich.edu/bitstream/2027.42/47034/1/11002_2005_Article_5901.pd

Understanding the Impact of In-Process Promotional Messages: An Application to Online Auctions

In-process promotions focus on promotional activities during marketing events such as auctions, crowdfunding, or fund-raising. Firms can observe consumers’ responses to these promotions and use this information to adjust future promotions sent during the same events. The authors study the impact of promotions on market outcomes and focus on one use of such promotions: messages sent during online auctions, in which the outcome is the final auction price. They propose that the effect of these messages can be understood by observing their aggregate impact on final auction prices and by examining how messages affect behaviors at the bid level, namely, new-bidder entry and jump bidding. These bid-level behaviors can, when summed at the auction level, affect auction prices. Besides examining the messages’ impact on bidder behavior, the authors study the auctioneer’s strategy in issuing these messages. They distinguish between informative messages, which focus on product attributes, and persuasive messages, which try to motivate the message recipients to bid. They test hypotheses derived from their framework using data from online auctions of Air France airline tickets. The authors also conduct “what-if” simulations to help auctioneers identify the optimal number of messages to send during an auction

Estimating the Impact of In-Auction Promotional Messages on Auction Prices

Auctioneers often issue promotional messages during auctions conducted live and online. We propose and test a model of the impact of these messages on final auction prices. The model examines messages’ direct price impact, which affects valuations of existing bidders, and their indirect price impact, through the two mediators of affecting new bidder entry and jump bidding. This model also examines how the auctioneer’s message-sending decisions are influenced by past bidding and past message-sending in the auction. We create sub-models of these bidder and auctioneer decisions, which allow dynamic auction decisions that change at each bid (for bidders) or bid interval (for the auctioneer), and link these sub-models to a sub-model of the final auction price. We also distinguish between informational messages that convey information about the item’s attributes and bidding messages that focus on bidder actions particular to auctions. The proposed model is supported when tested on data from real time Internet auctions of Air France airline tickets. A counterfactual analysis provides insights into how changing the frequency or placement of messages can increase or decrease the predicted auction price

Understanding the Impact of Promotional Messages in Live English Auctions : A Dynamic and Simultaneous Model of New Bidder's Entry, Sequence of Bids, and Auctioneer's Strategy

This paper proposes to measure the impact of promotional messages sent during an online auction, on the final price of this auction. We model this impact through a disaggregated and dynamic model. This model simultaneously takes into account the following three factors: (i) the direct impact of marketing messages on the auction price when messages affect bidders' valuations, (ii) the indirect impact of messages on this price when messages attract new bidders to the auction, and (iii) the possibility that the auctioneer's strategy for sending messages may depend on bidding activity, the number of bidders, and the current auction price. Results, based on online auctions organised by the French airline company Air France, show the indirect influence of promotional messages on the final auction price (measured by sequence of bids), through the entry of new bidders in the auction.Ce papier de recherche propose de mesurer l'impact de messages promotionnels envoyés durant une enchère, sur le prix d'adjudication de l'enchère. Nous modélisons cet impact à l'aide d'un modèle désagrégé et dynamique, qui tient compte des trois facteurs suivants de façon simultanée: (1) l'influence directe de messages promotionnels sur le prix d'adjudication quand les messages influencent les évaluations des enchérisseurs, (2) l'influence indirecte de message sur ce prix d'adjudication quand les messages attirent de nouveaux enchérisseurs, et (3) la possibilité que la stratégie du vendeur en termes d'envoi de messages dépende de l'activité de l'enchère, du nombre de participants et de leur vitesse de réaction. Les résultats, basés sur les enchères en ligne organisées par la compagnie aérienne Air France, montrent l'influence indirecte des messages promotionnels sur le prix d'adjudication de l'enchère (mesuré par la séquence des offres),à travers l'entrée de nouveaux enchérisseurs

Combining Buy-In Penalties with Commissions at Auction Houses

Most auction sellers consign property to auction houses rather than holding the auction themselves. In addition to charging sellers a commission on property that sells in the auction, many auction houses also specify buy-in penalties in auction contracts. This is an amount the seller must pay the auction house if the property fails to sell at auction. An important managerial question for auction houses is whether and when buy-in penalties can increase revenues of the auction house, seller, or both, and what combinations of commission and buy-in penalty to use. We show that auctions which combine buy-in penalties with lower commissions Pareto-dominate auctions that use only commissions. This strategy motivates the seller to set a lower reserve, which creates a surplus in auction revenues that can go to one or both parties. This strategy is Pareto-dominant even if the auction house and the seller are uncertain about the number of bidders at the auction, or the auction house is uncertain about the seller's own valuation for the property, at the time the buy-in penalty, commission, and reserve are contractually set. We also discuss the incentive issues raised by this strategy.auctions, bidding, commissions, pricing, penalty