IDEAS home Printed from
   My bibliography  Save this article

Curiosity of Pay-Per-Bid Auctions: Evidence from Auction Site


  • Miroslav Svoboda
  • Petr Bocák


This paper analyses the pay-per-bid auctions which have appeared recently on the Internet and scored an immediate business success. In these auctions bidders pay a small, but irrevocable fee each time they want to increase the price. In this paper we test the model suggested by Platt, Price and Tappen (2010), which forecasts the distribution of closing prices depending on the item´s value, bid fee and price increment. The data from the Czech leading auction site were chosen for the test. Observed closing prices distribution of about 69 % of commonly auctioned items fits the model. However, we find some theoretical and practical flaws in the model. Contrary to the model predictions, we observed that auctions with smaller price increments generated significantly higher revenue than auctions with higher price increments. We suggest that bidders who favour skewness in payoff distribution cause auctions with lower price increment run longer and therefore explain this discrepancy.

Suggested Citation

  • Miroslav Svoboda & Petr Bocák, 2013. "Curiosity of Pay-Per-Bid Auctions: Evidence from Auction Site," Prague Economic Papers, University of Economics, Prague, vol. 2013(3), pages 418-432.
  • Handle: RePEc:prg:jnlpep:v:2013:y:2013:i:3:id:460:p:418-432

    Download full text from publisher

    File URL:
    Download Restriction: free of charge

    File URL:
    Download Restriction: free of charge

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    1. Brennan C. Platt & Joseph Price & Henry Tappen, 2010. "Pay-to-Bid Auctions," NBER Working Papers 15695, National Bureau of Economic Research, Inc.
    2. Dan Kovenock & Michael R. Baye & Casper G. de Vries, 1996. "The all-pay auction with complete information (*)," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 8(2), pages 291-305.
    3. Garrett, Thomas A. & Sobel, Russell S., 1999. "Gamblers favor skewness, not risk: Further evidence from United States' lottery games," Economics Letters, Elsevier, vol. 63(1), pages 85-90, April.
    Full references (including those not matched with items on IDEAS)

    More about this item


    skewness; risk; auction theory; pay-per-bid auction; auction modelling;

    JEL classification:

    • C12 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Hypothesis Testing: General
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • L81 - Industrial Organization - - Industry Studies: Services - - - Retail and Wholesale Trade; e-Commerce
    • L83 - Industrial Organization - - Industry Studies: Services - - - Sports; Gambling; Restaurants; Recreation; Tourism


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:prg:jnlpep:v:2013:y:2013:i:3:id:460:p:418-432. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Frantisek Sokolovsky). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.