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Pennies from eBay: The Determinants of Price in Online Auctions

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Author Info

  • Doug Bryan

    ()
    (Anderson Consulting)

  • David Lucking-Reiley

    ()
    (Department of Economics, Vanderbilt University)

  • Naghi Prasad

    ()
    (Anderson 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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File URL: http://www.accessecon.com/pubs/VUECON/vu00-w03.pdf
File Function: Revised version, 2000
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Bibliographic Info

Paper provided by Vanderbilt University Department of Economics in its series Vanderbilt University Department of Economics Working Papers with number 0003.

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Date of creation: Jan 2000
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Handle: RePEc:van:wpaper:0003

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Web page: http://www.vanderbilt.edu/econ/wparchive/index.html

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Cited by:
  1. Hortacsu, Ali, 2005. "Trust and Reputation on eBay: Micro and Macro Perspectives," Department of Economics, Working Paper Series, Department of Economics, Institute for Business and Economic Research, UC Berkeley qt8vj7d50q, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
  2. Steven Anderson & Daniel Friedman & Garrett Milam & Nirvikar Singh, 2004. "Seller Strategies on eBay," Industrial Organization, EconWPA 0412004, EconWPA.
  3. Philipp Maier, 2005. "A `Global Village' without borders? International price differentials at eBay," DNB Working Papers, Netherlands Central Bank, Research Department 044, Netherlands Central Bank, Research Department.
  4. Axel Ockenfels, 2002. "Reputationsmechanismen auf Internet-Marktplattformen - Theorie und Empirie -," Papers on Strategic Interaction, Max Planck Institute of Economics, Strategic Interaction Group 2002-46, Max Planck Institute of Economics, Strategic Interaction Group.
  5. Rama Katkar & David Lucking-Reiley, 2000. "Public versus secret reserve prices in ebay auctions: Results from a pokemon field experiment," Natural Field Experiments, The Field Experiments Website 00285, The Field Experiments Website.
  6. 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, Max Planck Institute of Economics, Strategic Interaction Group 2002-32, Max Planck Institute of Economics, Strategic Interaction Group.
  7. 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, Vanderbilt University Department of Economics 0026, Vanderbilt University Department of Economics.
  8. 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.
  9. Yu Zhang & Jingping Gu & Qi Li, 2011. "Nonparametric panel estimation of online auction price processes," Empirical Economics, Springer, Springer, vol. 40(1), pages 51-68, February.
  10. Steven Anderson & Daniel Friedman & Garrett Milam & Nirvikar Singh, 2004. "Buy it Now: A Hybrid Internet Market Institution," Industrial Organization, EconWPA 0412003, EconWPA.
  11. Anderson, Steven & Friedman, Daniel & Milam, Garrett & Singh, Nirvikar, 2007. "Seller strategies on eBay: Does size matter?," MPRA Paper 4324, University Library of Munich, Germany.
  12. Thomas Andrews & Cynthia Benzing, 2007. "The Determinants of Price in Internet Auctions of Used Cars," Atlantic Economic Journal, International Atlantic Economic Society, International Atlantic Economic Society, vol. 35(1), pages 43-57, March.
  13. Luís Cabral & Ali Hortacsu, 2004. "The Dynamics of Seller Reputation: Theory and Evidence from eBay," Working Papers, New York University, Leonard N. Stern School of Business, Department of Economics 04-05, New York University, Leonard N. Stern School of Business, Department of Economics.
  14. 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, Elsevier, vol. 62(1), pages 22-30, January.

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