Selling a Dollar for More Than a Dollar? Evidence from Online Penny Auctions
Online penny auctions, emerged recently, are seen as an adaptation of the famous dollar auction and as ?the evil stepchild of game theory and behavioral economics.?We use the complete bid and bidder history at a website to study if penny auctions can sustain excessive pro?fits over time. The overwhelming majority of new bidders lose money, but they quit quickly. A very small percentage of bidders are experienced and strategically sophisticated, but they earn substantial profi?ts. Our evidence thus suggests that penny auctions cannot sustain excessive pro?fits without attracting a revolving door of new customers who will lose money.
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Avi Goldfarb & Mo Xiao, 2011.
"Who Thinks about the Competition? Managerial Ability and Strategic Entry in US Local Telephone Markets,"
American Economic Review,
American Economic Association, vol. 101(7), pages 3130-61, December.
- Avi Goldfarb & Mo Xiao, 2008. "Who thinks about the competition? Managerial ability and strategic entry in US local telephone markets," Working Papers 08-21, NET Institute, revised Oct 2008.
- John List, 2003.
"Does market experience eliminate market anomalies?,"
Natural Field Experiments
00297, The Field Experiments Website.
- John A. List, 2003. "Does Market Experience Eliminate Market Anomalies?," The Quarterly Journal of Economics, MIT Press, vol. 118(1), pages 41-71, February.
- Östling, Robert & Wang, Joseph Tao-yi & Chou, Eileen & Camerer, Colin F., 2007.
"Testing Game Theory in the Field: Swedish LUPI Lottery Games,"
SSE/EFI Working Paper Series in Economics and Finance
671, Stockholm School of Economics, revised 30 Oct 2007.
- Robert �stling & Joseph Tao-yi Wang & Eileen Y. Chou & Colin F. Camerer, 2011. "Testing Game Theory in the Field: Swedish LUPI Lottery Games," American Economic Journal: Microeconomics, American Economic Association, vol. 3(3), pages 1-33, August.
- Alexander L. Brown & Colin F. Camerer & Dan Lovallo, 2012. "To Review or Not to Review? Limited Strategic Thinking at the Movie Box Office," American Economic Journal: Microeconomics, American Economic Association, vol. 4(2), pages 1-26, May.
- Brennan C. Platt & Joseph Price & Henry Tappen, 2010. "Pay-to-Bid Auctions," NBER Working Papers 15695, National Bureau of Economic Research, Inc.
- Harold Houba & Dinard Laan & Dirk Veldhuizen, 2011. "Endogenous entry in lowest-unique sealed-bid auctions," Theory and Decision, Springer, vol. 71(2), pages 269-295, August.
- Liran Einav & Theresa Kuchler & Jonathan Levin & Neel Sundaresan, 2011.
"Learning from Seller Experiements in Online Markets,"
10-033, Stanford Institute for Economic Policy Research.
- Liran Einav & Theresa Kuchler & Jonathan D. Levin & Neel Sundaresan, 2011. "Learning from Seller Experiments in Online Markets," NBER Working Papers 17385, National Bureau of Economic Research, Inc.
- Joseph Golec & Maurry Tamarkin, 1998. "Bettors Love Skewness, Not Risk, at the Horse Track," Journal of Political Economy, University of Chicago Press, vol. 106(1), pages 205-225, February.
When requesting a correction, please mention this item's handle: RePEc:rff:dpaper:dp-13-15. 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: (Webmaster)
If references are entirely missing, you can add them using this form.