Nibbling, Sniping, and the Role of Uncertainty in Second-Price, Hard-Close Internet Auctions: Empirical Evidence from eBay

Nibbling, Sniping, and the Role of Uncertainty in Second-Price, Hard-Close Internet Auctions: Empirical Evidence from eBay

Daniel Friesner (Gonzaga University, USA), Carl S. Bozman (Gonzaga University, USA) and Matthew Q. McPherson (Gonzaga University, USA)
DOI: 10.4018/978-1-60566-910-6.ch010
OnDemand PDF Download:
$30.00
List Price: $37.50

Abstract

Internet auctions have gained widespread appeal as an efficient and effective means of buying and selling goods and services. This study examines buyer behavior on eBay, one of the most well-known Internet auction Web sites. eBay’s auction format is similar to that of a second-price, hard-close auction, which gives a rational participant an incentive to submit a bid that is equal to his or her maximum willingness to pay. But while traditional second-price, hard-close auctions assume that participants have reliable information about their own and other bidders’ reservation prices, eBay participants usually do not. This raises the possibility that eBay participants may adapt their bidding strategies and not actually bid their reservation prices because of increased uncertainty. In this article, we empirically examine the bidding patterns of online auction participants and compare our findings to the behavior of bidders in more conventional auction settings.
Chapter Preview
Top

Literature Review

Recent auction literature has focused on the impact of auction ending rules and sniping on the efficiency of Internet auctions. For example, Roth and Ockenfels (2002) examined eBay and Amazon auctions for both antiques and computers and find that the format for ending the auction has a significant impact on both the amount of sniping and the auctions’ subsequent outcomes. Ockenfels and Roth (2002) also examined the impact that artificial bidding agents have on the amount of sniping in eBay auctions. Bajari and Hortacsu (2003) collected a sample of data on eBay coin auctions and estimated how various characteristics of bidder behavior, such as sniping, impact the efficiency of auction outcomes.

Complete Chapter List

Search this Book:
Reset