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A new end-of-auction model for curbing sniping

Author

Listed:
  • R Malaga

    (Montclair State University)

  • D Porter

    (University of Southern California)

  • K Ord

    (Georgetown University)

  • B Montano

    (Georgetown University)

Abstract

The online auction market has been growing at a spectacular rate. Most auctions are open-bid auctions where all the participants know the current highest bid. This knowledge has led to a phenomenon known as sniping, whereby some bidders may wait until the last possible moment before bidding, thereby depriving other bidders of the opportunity to respond and also preventing sellers from obtaining the highest price for an item. This is especially true in the case of the commonly used second-price, fixed-deadline auction. We consider a procedure involving a randomly determined stopping time and show that this approach eliminates the potential benefits to a sniper. The scheme enables all bidders to compete more fairly and promotes an early bidding strategy, which is likely to increase the price received by the seller while providing adequate bidding opportunities for would-be buyers.

Suggested Citation

  • R Malaga & D Porter & K Ord & B Montano, 2010. "A new end-of-auction model for curbing sniping," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 61(8), pages 1265-1272, August.
    • Handle: RePEc:pal:jorsoc:v:61:y:2010:i:8:d:10.1057_jors.2009.79
    DOI: 10.1057/jors.2009.79
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    References listed on IDEAS

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    Cited by:

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    2. J-M Chen & H-L Cheng & I-C Lin, 2011. "On channel coordination under price-dependent revenue-sharing: can eBay's fee structure coordinate the channel?," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 62(11), pages 1992-2001, November.
    3. Rustamdjan Hakimov & C.-Philipp Heller & Dorothea Kübler & Morimitsu Kurino, 2021. "How to Avoid Black Markets for Appointments with Online Booking Systems," American Economic Review, American Economic Association, vol. 111(7), pages 2127-2151, July.
    4. Yan Chen & Peter Cramton & John A. List & Axel Ockenfels, 2021. "Market Design, Human Behavior, and Management," Management Science, INFORMS, vol. 67(9), pages 5317-5348, September.
    5. Christos Alexakis & Vasileios Pappas & Emmanouil Skarmeas, 2021. "Market abuse under different close price determination mechanisms: A European case," Post-Print hal-03182927, HAL.
    6. Alexakis, Christos & Pappas, Vasileios & Skarmeas, Emmanouil, 2021. "Market abuse under different close price determination mechanisms: A European case," International Review of Financial Analysis, Elsevier, vol. 74(C).
    7. Wen Cao & Qinyang Sha & Zhiyong Yao & Dingwei Gu & Xiang Shao, 2019. "Sniping in soft-close online auctions: empirical evidence from overstock," Marketing Letters, Springer, vol. 30(2), pages 179-191, June.

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