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Learning from Seller Experiements in Online Markets

  • Liran Einav

    ()

    (Economics Department, Stanford University)

  • Theresa Kuchler

    ()

    (Economics Department, Stanford University)

  • Jonathan Levin

    ()

    (Economics Department, Stanford University)

  • Neel Sundaresan

    ()

    (eBay Research Labs)

The internet has dramatically reduced the cost of varying prices, dis- plays and information provided to consumers, facilitating both active and passive experimentation. We document the prevalence of targeted pricing and auction design variation on eBay, and identify hundreds of thousands of experiments con- ducted by sellers across a wide array of retail products. We show how this type of data can be used to address questions about consumer behavior and market outcomes, and provide illustrative results on price dispersion, the frequency of over-bidding, the choice of reserve prices, ?buy now?options and other auction design parameters, and on consumer sensitivity to shipping fees. We argue that leveraging the experiments of market participants takes advantage of the scale and heterogeneity of online markets and can be a powerful approach for testing and measurement.

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Paper provided by Stanford Institute for Economic Policy Research in its series Discussion Papers with number 10-033.

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Date of creation: Aug 2011
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Handle: RePEc:sip:dpaper:10-033
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  1. Jennifer Brown & Tanjim Hossain & John Morgan, 2010. "Shrouded Attributes and Information Suppression: Evidence from the Field," The Quarterly Journal of Economics, MIT Press, vol. 125(2), pages 859-876, May.
  2. Steven Anderson & Daniel Friedman & Garrett Milam & Nirvikar Singh, 2004. "Buy it Now: A Hybrid Internet Market Institution," Industrial Organization 0412003, EconWPA.
  3. Patrick Bajari & Ali Horta�su, 2004. "Economic Insights from Internet Auctions," Journal of Economic Literature, American Economic Association, vol. 42(2), pages 457-486, June.
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