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A pseudo-endowment effect in internet auctions

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  • Bramsen, Jens-Martin

Abstract

Although bidders in an internet auction do not obtain the actual ownership of the item during the auction, they still act according to an endowment effect. In a unique data set of 17,000 Danish furniture auctions I find that having the leading bid, both in terms of time and dollars, will affect the bidders probability to rebid if outbid. Thus, expectations to own, i.e. “pseudo-endowment ”, seem to affect bidders’ willingness to pay in a relative fast and straightforward manor. Gener- ally, these data therefore support that the reference point, from which we measure losses and gains, is closely related to expectations.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 14813.

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Date of creation: Mar 2008
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Handle: RePEc:pra:mprapa:14813

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Related research

Keywords: Internet auctions; Reference-Dependent Preferences; Endowment Effect; bidding behavior; eBay; WTP; Reference Point;

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References

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  1. Botond Koszegi & Matthew Rabin, 2004. "A Model of Reference-Dependent Preferences," Method and Hist of Econ Thought 0407001, EconWPA.
  2. John List, 2003. "Does market experience eliminate market anomalies?," Natural Field Experiments 00297, The Field Experiments Website.
  3. Ulrike Malmendier & Young Han Lee, 2011. "The Bidder's Curse," American Economic Review, American Economic Association, vol. 101(2), pages 749-87, April.
  4. Bramsen, Jens-Martin, 2008. "Bid early and get it cheap - Timing effects in Internet auctions," MPRA Paper 14811, University Library of Munich, Germany.
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Cited by:
  1. Bramsen, Jens-Martin, 2008. "Learning to bid, but not to quit – Experience and Internet auctions," MPRA Paper 14815, University Library of Munich, Germany.

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