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A pseudo-endowment effect in internet auctions

Author

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  • Bramsen, Jens-Martin

Abstract

Although bidders in an internet auction do not obtain the actual ownership of the item during the auction, they still act according to an endowment effect. In a unique data set of 17,000 Danish furniture auctions I find that having the leading bid, both in terms of time and dollars, will affect the bidders probability to rebid if outbid. Thus, expectations to own, i.e. “pseudo-endowment ”, seem to affect bidders’ willingness to pay in a relative fast and straightforward manor. Gener- ally, these data therefore support that the reference point, from which we measure losses and gains, is closely related to expectations.

Suggested Citation

  • Bramsen, Jens-Martin, 2008. "A pseudo-endowment effect in internet auctions," MPRA Paper 14813, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:14813
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    File URL: https://mpra.ub.uni-muenchen.de/14813/1/MPRA_paper_14813.pdf
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    References listed on IDEAS

    as
    1. Botond Kőszegi & Matthew Rabin, 2006. "A Model of Reference-Dependent Preferences," The Quarterly Journal of Economics, Oxford University Press, vol. 121(4), pages 1133-1165.
    2. Ulrike Malmendier & Young Han Lee, 2011. "The Bidder's Curse," American Economic Review, American Economic Association, vol. 101(2), pages 749-787, April.
    3. John A. List, 2003. "Does Market Experience Eliminate Market Anomalies?," The Quarterly Journal of Economics, Oxford University Press, vol. 118(1), pages 41-71.
    4. Bramsen, Jens-Martin, 2008. "Bid early and get it cheap - Timing effects in Internet auctions," MPRA Paper 14811, University Library of Munich, Germany.
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    Cited by:

    1. Bramsen, Jens-Martin, 2008. "Learning to bid, but not to quit – Experience and Internet auctions," MPRA Paper 14815, University Library of Munich, Germany.
    2. Matthew Backus & Thomas Blake & Dimitriy V. Masterov & Steven Tadelis, 2017. "Expectation, Disappointment, and Exit: Reference Point Formation in a Marketplace," NBER Working Papers 23022, National Bureau of Economic Research, Inc.

    More about this item

    Keywords

    Internet auctions; Reference-Dependent Preferences; Endowment Effect; bidding behavior; eBay; WTP; Reference Point;

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles
    • D4 - Microeconomics - - Market Structure, Pricing, and Design

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