Online Auctions: A Behavioral Study Essay

Decent Essays

 Introduction o The rational-bidder based studies in auctions1 have been vastly investigated in 1980s and 1990s in Economy Journals. The Economists believe that the sellers prefer auctions in which the barriers of entry are rather low which would lead to higher utility for the seller (Bulow, Klemperer 2009). However, these studies are mainly focused on big-scale auctions. Big-scale auctions are the type of auctions in which bidders are large companies. On the other hand, on line auctions have properties which differentiate them from classical auctions. On line auction has become one of the most successful businesses since emergence of internet. Unlike many other web-services which lost their popularity (Ariely& Simonson 2005), even after …show more content…

For instance, online auctions eliminate the geographical barriers (Arielyt & Simonson, 2005). It also helps the bidders and auctioneer with time duration, which enables both party to be more flexible (Arielyt & Simonson, 2005). Finally it helps the auctioneers with cost efficiency (Arielyt & Simonson, 2005).
 Literature review:
Thanks to the availability of data, analyzing of different bidding behavior has become possible (Dass, 2011). As a result, scholars managed to take advantage of opportunity and augmented the areas of study in various aspect of online auction, for instance herding behavior (Dholakia &
Soltysinski, 2001), the impact of reserve prices (Häubl &Popkowski Leszczyc, 2001), the role of expertise (Wilcox,2000), the effects of auction formats (Lucking-Reiley,1999), price dynamics and forecasting (Jank and Shmueli 2006; Reddy and Dass 2006; Dass, Jank and Shmueli 2010), bidders’ willingness to pay (Park and Bradlow 2005; Chan, Kadiyali and Park 2007), reference points (Dholakia and Simonson 2005; Kamins, Drenze and Folkes 2004), buyer and seller reputation (Melnik and Alm 2002), forward-looking behavior (Zeithammer 2006), bidder experience (Borle, Boatwright and Kadane 2006), bidder heterogeneity and auction design (Bapna et al. 2004)3 and auction fraud(Huang Chua, Wareham, Robey,2007).
Thus, prior to emergence of these studies, there have been a huge game-theory based prediction for behavior of bidders and outcome of an auction

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