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How do sellers benefit from Buy-It-Now prices in eBay auctions?

Author

Listed:
  • Ivanova-Stenzel, Radosveta
  • Grebe, Tim
  • Kröger, Sabine

Abstract

We investigate experimentally on eBay how sellers set prices in "Buy-It-Now" (BIN) auctions. We find that the eBay format leads to prices substantially below those expected in second-price auctions. Moreover, our results reveal that the information available on eBay about buyer experience and bidding behavior correlates with the observed price deviation. Sellers respond strategically to this information. More experienced sellers ask for higher BIN-prices, whereas seller risk aversion does not effect their price decisions. Compared to an eBay auction without a BIN-price, the BIN-auction is more efficient and generates significantly higher revenue.

Suggested Citation

  • Ivanova-Stenzel, Radosveta & Grebe, Tim & Kröger, Sabine, 2019. "How do sellers benefit from Buy-It-Now prices in eBay auctions?," VfS Annual Conference 2019 (Leipzig): 30 Years after the Fall of the Berlin Wall - Democracy and Market Economy 203606, Verein für Socialpolitik / German Economic Association.
    • Handle: RePEc:zbw:vfsc19:203606
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    References listed on IDEAS

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    More about this item

    Keywords

    experience; online markets; eBay; BIN price; private value; experiment;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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