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eBay's Crowded Evenings: Competition Neglect in Market Entry Decisions

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  • Uri Simonsohn

    (The Wharton School, University of Pennsylvania, Philadelphia, Pennsylvania 19004)

Abstract

Do firms neglect competition when making entry decisions? This paper addresses this question analyzing the time of day at which eBay sellers set their auctions to end. Consistent with competition neglect, it is found that (i) a disproportionate share of auctions end during peak bidding hours, (ii) such hours exhibit lower selling rates and prices, and (iii) peak listing is more prevalent among sellers likely to have chosen ending time strategically, suggesting disproportionate entry is a mistake driven by bounded rationality rather than mindlessness. The results highlight the importance for marketing researchers of assessing rather than assuming the rationality of firm behavior.

Suggested Citation

  • Uri Simonsohn, 2010. "eBay's Crowded Evenings: Competition Neglect in Market Entry Decisions," Management Science, INFORMS, vol. 56(7), pages 1060-1073, July.
    • Handle: RePEc:inm:ormnsc:v:56:y:2010:i:7:p:1060-1073
    DOI: 10.1287/mnsc.1100.1180
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    References listed on IDEAS

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