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Bidding behavior and experience in internet auctions

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  • Pownall, Rachel A.J.
  • Wolk, Leonard

Abstract

We study the role of experience in internet art auctions by analyzing repeated bidding by the same bidder in a unique longitudinal field dataset. Our results show that experience significantly lowers the level of bids suggesting that bidders change their bidding behavior throughout time. Participating in more than ten auctions brings down average bids by up to 26%. We further test several possible explanations for the observed learning behavior and show that the change in bidding strategy is a result of a change in within-auction behavior that is generated with experience. Our results are robust to concerns of endogenous participation as well as bidder fixed effects.

Suggested Citation

  • Pownall, Rachel A.J. & Wolk, Leonard, 2013. "Bidding behavior and experience in internet auctions," European Economic Review, Elsevier, vol. 61(C), pages 14-27.
  • Handle: RePEc:eee:eecrev:v:61:y:2013:i:c:p:14-27
    DOI: 10.1016/j.euroecorev.2013.02.007
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    1. Giuseppe Attanasi & Kene Boun My & Andrea Guido & Mathieu Lefevbre, 2019. "Controlling Monopoly Power in a Classroom Double-Auction Market Experiment," Working Papers of BETA 2019-08, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    2. Giuseppe Attanasi & Kene Boun My & Andrea Guido & Mathieu Lefebvre, 2020. "Controlling Monopoly Power in a Double-Auction Market Experiment," GREDEG Working Papers 2020-06, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France.
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    More about this item

    Keywords

    Auctions; Bidding; Learning; Experience;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis

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