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Pennies from eBay: the Determinants of Price in Online Auctions

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Author Info

  • Doug Bryan

    (Andersen Consulting)

  • David Lucking-Reiley

    (Vanderbilt University)

  • Naghi Prasad

    (Andersen Consulting)

  • Daniel Reeves

    (University of Michigan)

Abstract

This paper presents an exploratory analysis of the determinants of prices in online auctions for collectible one-cent coins at the eBay Web site. Our initial data set consists of over 20,000 auctions which took place during July and August 1999, and was collected automaticaaly by a "spider" program. From this large data set, we provide a number of descriptive statistics on the patterns in eBay data. We then perform detailed analysis on a restricted sample of 461 mint-condition Indian-head pennies, for which we were able to obtain accurate estimates of book value from a coin-collector's Web site. We have three major findings. First, a seller's feedback ratings, reported by other eBay users, have a measurable effect on her auction prices. Negative feedback ratings have a much greater effect that positive feedback ratings do. Second, minimum bids and reserve prices tend to have positive effects on the final auction price, though this finding does not take into account the fact that these instruments also decrease the probability of the auction resulting in an actual sale. Also, minimum bids appear only to have a significant effect when they are binding on a single bidder's bid, as predicted by economic theory. Third, when a seller chooses to have her auction last for a longer period of days, this significantly increases the auction price on average.

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Bibliographic Info

Paper provided by Econometric Society in its series Econometric Society World Congress 2000 Contributed Papers with number 1736.

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Date of creation: 01 Aug 2000
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Handle: RePEc:ecm:wc2000:1736

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Cited by:
  1. Rama Katkar & David Lucking-Reiley, 2000. "Public Versus Secret Reserve Prices in eBay Auctions: Results of Pok�mon Field Experiment," Vanderbilt University Department of Economics Working Papers 0026, Vanderbilt University Department of Economics.
  2. Yu Zhang & Jingping Gu & Qi Li, 2011. "Nonparametric panel estimation of online auction price processes," Empirical Economics, Springer, vol. 40(1), pages 51-68, February.
  3. Resnick, Paul & Zeckhauser, Richard & Swanson, John & Lockwood, Kate, 2003. "The Value of Reputation on eBay: A Controlled Experiment," Working Paper Series rwp03-007, Harvard University, John F. Kennedy School of Government.
  4. Thomas Andrews & Cynthia Benzing, 2007. "The Determinants of Price in Internet Auctions of Used Cars," Atlantic Economic Journal, International Atlantic Economic Society, vol. 35(1), pages 43-57, March.
  5. Katkar Rama & Reiley David H, 2007. "Public versus Secret Reserve Prices in eBay Auctions: Results from a Pokémon Field Experiment," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 5(2), pages 1-25, January.
  6. Cabral, Luís M B & Hortaçsu, Ali, 2004. "The Dynamics of Seller Reputation: Theory and Evidence from eBay," CEPR Discussion Papers 4345, C.E.P.R. Discussion Papers.
  7. Anderson, Steve & Friedman, Daniel & Milam, Garrett & Singh, Nirvikar, 2004. "Buy it Now: A Hybrid Internet Market Institution," Santa Cruz Department of Economics, Working Paper Series qt21d715v9, Department of Economics, UC Santa Cruz.
  8. Alvin E. Roth & Axel Ockenfels, . "Last-Minute Bidding and the Rules for Ending Second-Price Auctions: Evidence from eBay and Amazon Auctions on the Internet," Papers on Strategic Interaction 2002-32, Max Planck Institute of Economics, Strategic Interaction Group.
  9. Steven Anderson & Daniel Friedman & Garrett Milam & Nirvikar Singh, 2004. "Seller Strategies on eBay," Industrial Organization 0412004, EconWPA.
  10. Reynolds, Kristy E. & Gilkeson, James H. & Niedrich, Ronald W., 2009. "The influence of seller strategy on the winning price in online auctions: A moderated mediation model," Journal of Business Research, Elsevier, vol. 62(1), pages 22-30, January.
  11. Philipp Maier, 2005. "A global village without borders? international price differentials at eBay," Proceedings, Board of Governors of the Federal Reserve System (U.S.).
  12. Hortacsu, Ali, 2005. "Trust and Reputation on eBay: Micro and Macro Perspectives," Department of Economics, Working Paper Series qt8vj7d50q, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
  13. Axel Ockenfels, 2002. "Reputationsmechanismen auf Internet-Marktplattformen - Theorie und Empirie -," Papers on Strategic Interaction 2002-46, Max Planck Institute of Economics, Strategic Interaction Group.
  14. Anderson, Steven & Friedman, Daniel & Milam, Garrett & Singh, Nirvikar, 2007. "Seller strategies on eBay: Does size matter?," MPRA Paper 4324, University Library of Munich, Germany.

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