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A Simulation-Based Model for Final Price Prediction in Online Auctions


  • Shihyu Chou

    (Department of Marketing, National Chung Hsing University, Taiwan)

  • Chin-Shien Lin

    (Department of Business Administration, National Chung Hsing University, Taiwan)

  • Chi-hong Chen

    (Institute of Electronic Commerce, National Chung Hsing , Taiwan)

  • Tai-Ru Ho

    (Institute of Electronic Commerce, National Chung Hsing , Taiwan)

  • Yu-Chen Hsieh

    (Educational Measurement and Statistics, National Taichung Teachers College, Taiwan)


Online auctions, a profitable, exciting, and dynamic part of e-commerce, have enjoyed increasing public interest. However, there is still a paucity of literature on final price prediction for online auctions. Although Markov process models provide a mathematical approach to predicting online auction prices, estimating parameters of a Markov process model in practice is a challenging task. In this paper we propose a simulation-based model as an alternative approach to predicting the final price in online auctions. The simulation results show that the proposed model can predict the final price more accurately than a Markov process model. Additionally, the consistent lower predictions of the Markov process model suggest a direction for future research into improving performance in both models.

Suggested Citation

  • Shihyu Chou & Chin-Shien Lin & Chi-hong Chen & Tai-Ru Ho & Yu-Chen Hsieh, 2007. "A Simulation-Based Model for Final Price Prediction in Online Auctions," Journal of Economics and Management, College of Business, Feng Chia University, Taiwan, vol. 3(1), pages 1-16, January.
  • Handle: RePEc:jec:journl:v:3:y:2007:i:1:p:1-16

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    References listed on IDEAS

    1. McAfee, R Preston & McMillan, John, 1987. "Auctions and Bidding," Journal of Economic Literature, American Economic Association, vol. 25(2), pages 699-738, June.
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    More about this item


    Markov process; simulation; e-commerce; auction; final price prediction;

    JEL classification:

    • C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis


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