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A LABORATORY STUDY OF AUCTIONS WITH A BUY PRICE

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We present a series of laboratory experiments that examine auctions with buy prices, which are prices that allow a bidder to stop the auction and buy the item immediately. Two types of buy prices are considered, one that is available throughout the auction and one that disappears with an initial bid. Both are evaluated with and without proxy bidding. We find that the use of a buy price increases revenue, early bidding, and auction efficiency. Differences between outcomes in auctions with permanent and temporary buy prices are consistent with the observed choices in auction design made by online auction sites. (JEL C90, D44, C70, L81)
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Document Type: Research Article

Affiliations: 1: Department of Economics, Western Washington University, Bellingham, WA 98225. Phone 360-650-7947, Fax: 360-650-6315 2: Associate Professor, Department of Economics, Western Washington University, Bellingham, WA 98225. Phone 1-360-650-7947, Fax: 1-360-650-6315 3: Department of Economics, University of California Riverside, Riverside, CA 92521. Phone 520-204-5017, Fax: 951-827-5685 4: Schroeder Family School of Business Administration, University of Evansville, Evansville, IN 47722. Phone 812-488-2866, Fax: 812-488-2872

Publication date: April 1, 2013

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