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Last-Minute Bidding and the Rules for Ending Second-Price Auctions: Evidence from eBay and Amazon Auctions on the Internet

Last-Minute Bidding and the Rules for Ending Second-Price Auctions: Evidence from eBay and Amazon... By ALVIN E. ROTH Auctions on the Internet provide a new source of data on how bidding is influenced by the detailed rules of the auction. Here we study the second-price auctions run by eBay and Amazon, in which a bidder submits a reservation price and has this (maximum) price used to bid for him by proxy. That is, a bidder can submit his reservation price (called a proxy bid) early in the auction and have the resulting bid register as the minimum increment above the previous high bid. As subsequent reservation prices are submitted, the bid rises by the minimum increment until the second-highest submitted reservation price is exceeded. Hence, an early bid with a reservation price higher than any other submitted during the auction will win the auction and pay only the minimum increment AND AXEL OCKENFELS* * Roth: Harvard University, Department of Economics and Graduate School of Business Administration, Soldiers Field Road, Baker Library 183, Boston, MA 02163 (e-mail: aroth@hbs.edu; URL: http://www.economics.harvard.edu/ aroth/alroth.html ); Ockenfels: Max Planck Institute for Research into Economic Systems, Strategic Interaction Group, Kahlaische Strasse 10, D-07745 Jena, Germany (e-mail: ockenfels@mpiew-jena.mpg.de; URL: http://www.mpiew-jena.de/esi/ockenfels/index.html ). We gratefully acknowledge helpful conversations on this subject http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png American Economic Review American Economic Association

Last-Minute Bidding and the Rules for Ending Second-Price Auctions: Evidence from eBay and Amazon Auctions on the Internet

American Economic Review , Volume 92 (4) – Sep 1, 2002

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References (27)

Publisher
American Economic Association
Copyright
Copyright © 2002 by the American Economic Association
Subject
Shorter Papers
ISSN
0002-8282
DOI
10.1257/00028280260344632
Publisher site
See Article on Publisher Site

Abstract

By ALVIN E. ROTH Auctions on the Internet provide a new source of data on how bidding is influenced by the detailed rules of the auction. Here we study the second-price auctions run by eBay and Amazon, in which a bidder submits a reservation price and has this (maximum) price used to bid for him by proxy. That is, a bidder can submit his reservation price (called a proxy bid) early in the auction and have the resulting bid register as the minimum increment above the previous high bid. As subsequent reservation prices are submitted, the bid rises by the minimum increment until the second-highest submitted reservation price is exceeded. Hence, an early bid with a reservation price higher than any other submitted during the auction will win the auction and pay only the minimum increment AND AXEL OCKENFELS* * Roth: Harvard University, Department of Economics and Graduate School of Business Administration, Soldiers Field Road, Baker Library 183, Boston, MA 02163 (e-mail: aroth@hbs.edu; URL: http://www.economics.harvard.edu/ aroth/alroth.html ); Ockenfels: Max Planck Institute for Research into Economic Systems, Strategic Interaction Group, Kahlaische Strasse 10, D-07745 Jena, Germany (e-mail: ockenfels@mpiew-jena.mpg.de; URL: http://www.mpiew-jena.de/esi/ockenfels/index.html ). We gratefully acknowledge helpful conversations on this subject

Journal

American Economic ReviewAmerican Economic Association

Published: Sep 1, 2002

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