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Economic Insights from Internet Auctions

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  • Patrick Bajari
  • Ali Horta�su

Abstract

This paper surveys recent studies of internet auctions. Four main areas of research are summarized. First, we survey several studies that document and attempt to explain the frequently observed sniping, or last-second bidding behavior, in these auctions. Second, we summarize several methods proposed to quantify the distortions caused by asymmetric information in these markets, most notably due to the winner's curse. Third, we explore research about the role of reputation mechanisms installed to help combat these distortions. Finally, we discuss what internet auctions have to teach us about auction design.

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Bibliographic Info

Article provided by American Economic Association in its journal Journal of Economic Literature.

Volume (Year): 42 (2004)
Issue (Month): 2 (June)
Pages: 457-486

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Handle: RePEc:aea:jeclit:v:42:y:2004:i:2:p:457-486

Note: DOI: 10.1257/0022051041409075
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  1. McAfee, R Preston & Quan, Daniel C & Vincent, Daniel R, 2002. "How to Set Minimum Acceptable Bids, with an Application to Real Estate Auctions," Journal of Industrial Economics, Wiley Blackwell, Wiley Blackwell, vol. 50(4), pages 391-416, December.
  2. Jeffrey A. Livingston, 2005. "How Valuable Is a Good Reputation? A Sample Selection Model of Internet Auctions," The Review of Economics and Statistics, MIT Press, vol. 87(3), pages 453-465, August.
  3. Bajari, Patrick & Hortacsu, Ali, 2003. " The Winner's Curse, Reserve Prices, and Endogenous Entry: Empirical Insights from eBay Auctions," RAND Journal of Economics, The RAND Corporation, vol. 34(2), pages 329-55, Summer.
  4. Bernard ELYAKIME & Jean-Jacques LAFFONT & Patrice LOISEL & Quang VUONG, 1994. "First-Price Sealed-Bid Auctions with Secret Reservation Prices," Annales d'Economie et de Statistique, ENSAE, issue 34, pages 115-141.
  5. David Lucking-Reiley & Daniel F. Spulber, 2001. "Business-to-Business Electronic Commerce," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 15(1), pages 55-68, Winter.
  6. Hansen, Robert G, 1986. "Sealed-Bid versus Open Auctions: The Evidence," Economic Inquiry, Western Economic Association International, Western Economic Association International, vol. 24(1), pages 125-42, January.
  7. Colin F. Camerer, 1998. "Can Asset Markets Be Manipulated? A Field Experiment with Racetrack Betting," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 106(3), pages 457-482, June.
  8. Holt, Charles A, Jr, 1980. "Competitive Bidding for Contracts under Alternative Auction Procedures," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 88(3), pages 433-45, June.
  9. Vincent Daniel R., 1995. "Bidding Off the Wall: Why Reserve Prices May Be Kept Secret," Journal of Economic Theory, Elsevier, Elsevier, vol. 65(2), pages 575-584, April.
  10. Colin Camerer, 1998. "Can asset markets be manipulated? A field experiment with racetrack betting," Natural Field Experiments, The Field Experiments Website 00222, The Field Experiments Website.
  11. Baron David P., 2002. "Private Ordering on the Internet: The EBay Community of Traders," Business and Politics, De Gruyter, De Gruyter, vol. 4(3), pages 1-31, November.
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