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“Bid more, pay less” – overbidding and the Bidder’s curse in teleshopping auctions

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  • Fabian Ocker

    (Karlsruhe Institute of Technology (KIT))

Abstract

This paper provides a theoretical and empirical analysis of the multi-unit Dutch teleshopping auctions of 1–2–3.tv. There are two channels for sales transactions: Customers either bid in the teleshopping auctions or purchase in the online shop for a simultaneously available fixed price. Our theoretical analysis indicates that profit-maximizing customers do not overbid the fixed price, since they risk experiencing the Bidder’s Curse: Buying at a uniform auction price that is higher than the fixed price. Our data set includes nearly 700,000 recorded bids. We find that customers overbid in 26% of all bids, but the Bidder’s Curse only occurs in 5% of all auctions. Offline-bidders (telephone calls) overbid both by larger amounts and more often than do online-bidders (website or app), and, on average, the most frequent customers do not experience learning effects.

Suggested Citation

  • Fabian Ocker, 2018. "“Bid more, pay less” – overbidding and the Bidder’s curse in teleshopping auctions," Electronic Markets, Springer;IIM University of St. Gallen, vol. 28(4), pages 491-508, November.
    • Handle: RePEc:spr:elmark:v:28:y:2018:i:4:d:10.1007_s12525-018-0295-4
    DOI: 10.1007/s12525-018-0295-4
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    More about this item

    Keywords

    Bidder’s curse; Multi-unit auction; Online auction; Search cost; Teleshopping auction;
    All these keywords.

    JEL classification:

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

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