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A Simulation-Based Model for Final Price Prediction in Online Auctions

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Author Info

  • Shihyu Chou

    (Department of Marketing, National Chung Hsing University, Taiwan)

  • Chin-Shien Lin

    (Department of Business Administration, National Chung Hsing University, Taiwan)

  • Chi-hong Chen

    (Institute of Electronic Commerce, National Chung Hsing , Taiwan)

  • Tai-Ru Ho

    (Institute of Electronic Commerce, National Chung Hsing , Taiwan)

  • Yu-Chen Hsieh

    (Educational Measurement and Statistics, National Taichung Teachers College, Taiwan)

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    Abstract

    Online auctions, a profitable, exciting, and dynamic part of e-commerce, have enjoyed increasing public interest. However, there is still a paucity of literature on final price prediction for online auctions. Although Markov process models provide a mathematical approach to predicting online auction prices, estimating parameters of a Markov process model in practice is a challenging task. In this paper we propose a simulation-based model as an alternative approach to predicting the final price in online auctions. The simulation results show that the proposed model can predict the final price more accurately than a Markov process model. Additionally, the consistent lower predictions of the Markov process model suggest a direction for future research into improving performance in both models.

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    File URL: http://www.jem.org.tw/content/pdf/Vol.3No.1/01.pdf
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    File URL: http://www.jem.org.tw/content/abstract/Vol.3No.1/English/01.htm
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    Bibliographic Info

    Article provided by College of Business, Feng Chia University, Taiwan in its journal Journal of Economics and Management.

    Volume (Year): 3 (2007)
    Issue (Month): 1 (January)
    Pages: 1-16

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    Handle: RePEc:jec:journl:v:3:y:2007:i:1:p:1-16

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    Related research

    Keywords: Markov process; simulation; e-commerce; auction; final price prediction;

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    1. McAfee, R Preston & McMillan, John, 1987. "Auctions and Bidding," Journal of Economic Literature, American Economic Association, vol. 25(2), pages 699-738, June.
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