An Empirical Investigation into the Structure of Bidding in Online Auctions

Authors: Vishwanath, Arun; Barnett, George

Source: Electronic Markets, Volume 15, Number 3, 01Aug2005 , pp. 261-268(8)

Publisher: Routledge, part of the Taylor & Francis Group

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Abstract:

The study maps the bidding patterns of 1,051 completed English auctions from the eBay website to study their structural patterns. The overall pattern appears to be a cubic. People initially bid the price to 60–70% of the final value. The price levels off only to take off near the end of the auction, when it reaches its final price. The second part of the study measures the effects of information on bidding. The effect of secret reserve price information on auctions is compared for differences in bidder participation and resultant final values. The results indicate significant structural differences in bidding patterns and bidder behaviour for auctions with secret reserve price information. When compared to auctions without reserve price, completed auctions with reserve price attract more bidders, more competitive bidding, and consequently realize higher final values.

Keywords: online auctions; bidder behaviour; reserve price; eBay

Document Type: Research article

DOI: 10.1080/10196780500209036

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