The impact of the irrelevant-temporary buy-options and bidding behavior in online auctions

Ronald Peeters; Martin Strobel; Dries Vermeulen; Markus Walzl

doi:10.3390/g7010008

The impact of the irrelevant-temporary buy-options and bidding behavior in online auctions

Ronald Peeters^*, Martin Strobel, Dries Vermeulen, Markus Walzl

^*Corresponding author for this work

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Abstract

With a laboratory experiment, we study the impact of buy-options and the corresponding buy-price on revenues and bidding behavior in (online) proxy-auctions with independent private valuations. We show that temporary buy-options may reduce revenues for two reasons: At low buy-prices, the application of the buy-option avoids revenue-enhancing bidding; at high buy-prices, bidders are reluctant to bid above the option price (even though the option is no longer available once an auction has started). The latter suggests a particular type of anchoring, where bidders use the buy-price to update their expectations about the strengths of their opponents.

Original language	English
Pages (from-to)	1-19
Journal	Games
Volume	7
Issue number	1
DOIs	https://doi.org/10.3390/g7010008
Publication status	Published - 2016

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The impact of the irrelevant - Temporary buy-options and bidding behavior in online auctions
Peeters, R. J. A. P., Strobel, M., Vermeulen, A. J. & Walzl, M., 1 Jan 2007, Maastricht: METEOR, Maastricht University School of Business and Economics, 25 p. (METEOR Research Memorandum; No. 027).
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abstract = "With a laboratory experiment, we study the impact of buy-options and the corresponding buy-price on revenues and bidding behavior in (online) proxy-auctions with independent private valuations. We show that temporary buy-options may reduce revenues for two reasons: At low buy-prices, the application of the buy-option avoids revenue-enhancing bidding; at high buy-prices, bidders are reluctant to bid above the option price (even though the option is no longer available once an auction has started). The latter suggests a particular type of anchoring, where bidders use the buy-price to update their expectations about the strengths of their opponents.",

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The impact of the irrelevant-temporary buy-options and bidding behavior in online auctions

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The impact of the irrelevant - Temporary buy-options and bidding behavior in online auctions

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