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Bid early and get it cheap - Timing effects in Internet auctions

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  • Bramsen, Jens-Martin

Abstract

Most internet auction sites, like eBay, use a proxy bidding system where bidders can put in their maximum bid and let a proxy bidder (a computer) bid for them. Yet many bidders speculate about how to bid and employ bidding strategies. This paper examines how the timing of bids can affect the final price. In a unique data set of 17,000 Scandinavian furniture auctions it turns out that early price increases, i.e. much early bidding, scare off bidders and therefore result in lower prices, whereas much late bidding results in higher prices. Sniping is therefore not a successful strategy to avoid bidding wars.

Suggested Citation

  • Bramsen, Jens-Martin, 2008. "Bid early and get it cheap - Timing effects in Internet auctions," MPRA Paper 14811, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:14811
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    File URL: https://mpra.ub.uni-muenchen.de/14811/1/MPRA_paper_14811.pdf
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    References listed on IDEAS

    as
    1. Patrick Bajari & Ali Hortaçsu, 2004. "Economic Insights from Internet Auctions," Journal of Economic Literature, American Economic Association, vol. 42(2), pages 457-486, June.
    2. Ockenfels, Axel & Roth, Alvin E., 2006. "Late and multiple bidding in second price Internet auctions: Theory and evidence concerning different rules for ending an auction," Games and Economic Behavior, Elsevier, vol. 55(2), pages 297-320, May.
    3. Axel Ockenfels & Alvin E. Roth, 2001. "The Timing of Bids in Internet Auctions: Market Design, Bidder Behavior, and Artificial Agents," Papers on Strategic Interaction 2002-33, Max Planck Institute of Economics, Strategic Interaction Group.
    4. Ulrike Malmendier & Young Han Lee, 2011. "The Bidder's Curse," American Economic Review, American Economic Association, vol. 101(2), pages 749-787, April.
    5. Alvin E. Roth & Axel Ockenfels, 2002. "Last-Minute Bidding and the Rules for Ending Second-Price Auctions: Evidence from eBay and Amazon Auctions on the Internet," American Economic Review, American Economic Association, vol. 92(4), pages 1093-1103, September.
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    Cited by:

    1. Bramsen, Jens-Martin, 2008. "Learning to bid, but not to quit – Experience and Internet auctions," MPRA Paper 14815, University Library of Munich, Germany.
    2. Kamins, Michael A. & Noy, Avi & Steinhart, Yael & Mazursky, David, 2011. "The Effect of Social Cues on Sniping Behavior in Internet Auctions: Field Evidence and a Lab Experiment," Journal of Interactive Marketing, Elsevier, vol. 25(4), pages 241-250.
    3. Bramsen, Jens-Martin, 2008. "A pseudo-endowment effect in internet auctions," MPRA Paper 14813, University Library of Munich, Germany.

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    More about this item

    Keywords

    Internet auctions; Auction fever; Pseudo-endowment; Bidding behavior; eBay; Strategies; WTP;
    All these keywords.

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D4 - Microeconomics - - Market Structure, Pricing, and Design

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