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Bidding behavior in competing auctions: Evidence from eBay

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  • Anwar, Sajid
  • McMillan, Robert
  • Zheng, Mingli

Abstract

Much of the existing auction literature treats auctions as running independently of one another, with each bidder choosing to participate in only one auction. However, in many online auctions, a number of substitutable goods are auctioned concurrently and bidders can bid on several auctions at the same time. Recent theoretical research shows how bidders can gain from the existence of competing auctions, the current paper providing the first empirical evidence in support of competing auctions theory using online auctions data from eBay. Our results indicate that a significant proportion of bidders do bid across competing auctions and that bidders tend to submit bids on auctions with the lowest standing bid, as the theory predicts. The paper also shows that winning bidders who cross-bid pay lower prices on average than winning bidders who do not.

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Bibliographic Info

Article provided by Elsevier in its journal European Economic Review.

Volume (Year): 50 (2006)
Issue (Month): 2 (February)
Pages: 307-322

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Handle: RePEc:eee:eecrev:v:50:y:2006:i:2:p:307-322

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Web page: http://www.elsevier.com/locate/eer

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References

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  1. Michael Peters & Sergei Severinov, 1995. "Competition Among Sellers who offer Auctions Instead of Prices," Working Papers peters-95-02, University of Toronto, Department of Economics.
  2. Peters, Michael & Severinov, Sergei, 2005. "Internet Auctions with Many Traders," Microeconomics.ca working papers, Vancouver School of Economics peters-05-03-30-03-06-03, Vancouver School of Economics, revised 23 Jan 2006.
  3. Glenn Ellison & Drew Fudenberg & Markus Mobius, 2010. "Competing Auctions," Levine's Working Paper Archive 506439000000000092, David K. Levine.
  4. Ockenfels, Axel & Roth, Alvin E., 2006. "Late and multiple bidding in second price Internet auctions: Theory and evidence concerning different rules for ending an auction," Games and Economic Behavior, Elsevier, Elsevier, vol. 55(2), pages 297-320, May.
  5. Lucking-Reiley, David, 2000. "Auctions on the Internet: What's Being Auctioned, and How?," Journal of Industrial Economics, Wiley Blackwell, Wiley Blackwell, vol. 48(3), pages 227-52, September.
  6. Alvin E. Roth & Axel Ockenfels, 2000. "Last Minute Bidding and the Rules for Ending Second-Price Auctions: Theory and Evidence from a Natural Experiment on the Internet," NBER Working Papers 7729, National Bureau of Economic Research, Inc.
  7. Ivanova-Stenzel, Radosveta & Salmon, Tim, 2002. "Bidder preferences among auction institutions," SFB 373 Discussion Papers 2002,86, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
  8. Patrick Bajari & Ali Horta�su, 2004. "Economic Insights from Internet Auctions," Journal of Economic Literature, American Economic Association, vol. 42(2), pages 457-486, June.
  9. Cabral, Luís M B & Hortaçsu, Ali, 2004. "The Dynamics of Seller Reputation: Theory and Evidence from eBay," CEPR Discussion Papers, C.E.P.R. Discussion Papers 4345, C.E.P.R. Discussion Papers.
  10. Paul Resnick & Richard Zeckhauser & John Swanson & Kate Lockwood, 2006. "The value of reputation on eBay: A controlled experiment," Experimental Economics, Springer, Springer, vol. 9(2), pages 79-101, June.
  11. Alvin E. Roth & Axel Ockenfels, 2002. "Last-Minute Bidding and the Rules for Ending Second-Price Auctions: Evidence from eBay and Amazon Auctions on the Internet," American Economic Review, American Economic Association, American Economic Association, vol. 92(4), pages 1093-1103, September.
  12. David Lucking-Reiley, 1999. "Using field experiments to test equivalence between auction formats: Magic on the internet," Framed Field Experiments 00183, The Field Experiments Website.
  13. 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.
  14. McAfee, R Preston, 1993. "Mechanism Design by Competing Sellers," Econometrica, Econometric Society, Econometric Society, vol. 61(6), pages 1281-1312, November.
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Citations

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Cited by:
  1. Axel Ockenfels & David Reiley & Abdolkarim Sadrieh, 2006. "Online Auctions," NBER Working Papers 12785, National Bureau of Economic Research, Inc.
  2. Ernan Haruvy & Peter T. L. Popkowski Leszczyc & Octavian Carare & James C. Cox & Eric A. Greenleaf & Wolfgang Jank & Sandy Jap & Young-Hoon Park & Michael H. Rothkopf, 2008. "Competition Between Auctions," Experimental Economics Center Working Paper Series, Experimental Economics Center, Andrew Young School of Policy Studies, Georgia State University 2008-02, Experimental Economics Center, Andrew Young School of Policy Studies, Georgia State University.
  3. Lesley Chiou & Jennifer Pate, 2010. "Internet Auctions and Frictionless Commerce: Evidence from the Retail Gift Card Market," Review of Industrial Organization, Springer, Springer, vol. 36(3), pages 295-304, May.
  4. Michal Król, 2012. "‘Everything must go!’- Cournot as a Stable Convention within Strategic Supply Function Competition," The School of Economics Discussion Paper Series, Economics, The University of Manchester 1217, Economics, The University of Manchester.
  5. Wedad Elmaghraby & Anandasivam Gopal & Ali Pilehvar, 2012. "Reference Prices and Bidder Heterogeneity in Secondary Market Online B2B Auctions," Working Papers, NET Institute 12-06, NET Institute, revised Sep 2012.
  6. Sascha Füllbrunn, 2009. "A comparison of Candle Auctions and Hard Close Auctions with Common Values," FEMM Working Papers 09019, Otto-von-Guericke University Magdeburg, Faculty of Economics and Management.
  7. Kevin Hasker & Robin Sickles, 2010. "eBay in the Economic Literature: Analysis of an Auction Marketplace," Review of Industrial Organization, Springer, Springer, vol. 37(1), pages 3-42, August.
  8. Andersson, Tommy & Andersson, Christer & Andersson, Fredrik, 2010. "An Empirical Investigation of Efficiency and Price Uniformity in Competing Auctions," Working Papers, Lund University, Department of Economics 2010:14, Lund University, Department of Economics.
  9. Sascha Füllbrunn, 2007. "Collusion or Sniping in simultaneous ascending Auctions," FEMM Working Papers 07025, Otto-von-Guericke University Magdeburg, Faculty of Economics and Management.
  10. Liu, Kang Ernest & Shiu, Ji-Liang & Sun, Chia-Hung, 2013. "How different are consumers in Internet auction markets? Evidence from Japan and Taiwan," Japan and the World Economy, Elsevier, Elsevier, vol. 28(C), pages 1-12.
  11. Chia-Hung Sun & Kang Liu, 2010. "Information asymmetry and small business in online auction market," Small Business Economics, Springer, Springer, vol. 34(4), pages 433-444, May.
  12. Moldovanu, Benny & Sela, Aner & Shi, Xianwen, 2008. "Competing auctions with endogenous quantities," Journal of Economic Theory, Elsevier, Elsevier, vol. 141(1), pages 1-27, July.
  13. Genti Kostandini & Elton Mykerezi & Eftila Tanellari & Nour Dib, 2011. "Does Buyer Experience Pay Off? Evidence from eBay," Review of Industrial Organization, Springer, Springer, vol. 39(3), pages 253-265, November.
  14. Taylor, Greg, 2012. "Defensive sniping and efficiency in simultaneous hard-close proxy auctions," Journal of Mathematical Economics, Elsevier, vol. 48(1), pages 51-58.
  15. Sheng, Li, 2010. "Competing or cooperating to host mega events: A simple model," Economic Modelling, Elsevier, vol. 27(1), pages 375-379, January.
  16. Kevin Yili Hong & Alex Chong Wang & Paul A. Pavlou, 2013. "How does Bid Visibility Matter in Buyer-Determined Auctions? Comparing Open and Sealed Bid Auctions in Online Labor Markets," Working Papers, NET Institute 13-05, NET Institute.

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