Persistent Link:
http://hdl.handle.net/10150/195016
Title:
Bidding Behavior in Internet Auction Markets
Author:
Vadovic, Rado
Issue Date:
2006
Publisher:
The University of Arizona.
Rights:
Copyright © is held by the author. Digital access to this material is made possible by the University Libraries, University of Arizona. Further transmission, reproduction or presentation (such as public display or performance) of protected items is prohibited except with permission of the author.
Abstract:
In this dissertation I study bidding behavior in Internet Auction Markets. I focus on practice called "multiple bidding" which occurs when a single bidder places numerous bids throughout the same auction. Multiple bidding appears frequently in the data but the incentives that motivate it are not well understood. In the first chapter I develop a theoretical model in which multiple bidding is an equilibrium behavior by rational bidders. The model has a dynamic auction with two bidders who can search for outside prices while bidding in the auction. Each bidder has a search cost which is her private information. When outside prices are private (independently drawn and identically distributed), then, there is an equilibrium in which bidders with the lower search costs bid only late and always search, while the bidders with higher search costs bid both early and late and search as if they coordinated their search decisions, i.e., the bidder with the lower search cost searches and the other bidder does not. This equilibrium by itself provides an explanation of two frequently occurring bidding patterns (late and multiple bidding). In the second chapter I study experimentally the effect of early bids in dynamic auctions on how bidders search for outside prices. The design has two bidders participating in an ascending clock-auction during which any one of the bidders can pause the auction clock. This I interpret as placing an early bid. Once the auction is paused both bidders can simultaneously search for an alternative outside price. Results indicate that pausing decisions by subjects impact their subsequent searching for outside prices, i.e., whether a subject decides to search or not depends on whether she has paused the auction or not. Subjects behave as if they coordinated their searching decisions: the bidder who pauses the auction also searches with high frequency and the other bidder does not. Because this type of behavior increases both the efficiency and the profitability of the auction we favor the use of policies that promote early bidding in practice, such as, longer auctions and lower public reserve prices.
Type:
text; Electronic Dissertation
Keywords:
auctions; bidding; Internet; e-commerce
Degree Name:
PhD
Degree Level:
doctoral
Degree Program:
Economics; Graduate College
Degree Grantor:
University of Arizona
Advisor:
Wooders, John C.
Committee Chair:
Wooders, John C.

Full metadata record

DC FieldValue Language
dc.language.isoENen_US
dc.titleBidding Behavior in Internet Auction Marketsen_US
dc.creatorVadovic, Radoen_US
dc.contributor.authorVadovic, Radoen_US
dc.date.issued2006en_US
dc.publisherThe University of Arizona.en_US
dc.rightsCopyright © is held by the author. Digital access to this material is made possible by the University Libraries, University of Arizona. Further transmission, reproduction or presentation (such as public display or performance) of protected items is prohibited except with permission of the author.en_US
dc.description.abstractIn this dissertation I study bidding behavior in Internet Auction Markets. I focus on practice called "multiple bidding" which occurs when a single bidder places numerous bids throughout the same auction. Multiple bidding appears frequently in the data but the incentives that motivate it are not well understood. In the first chapter I develop a theoretical model in which multiple bidding is an equilibrium behavior by rational bidders. The model has a dynamic auction with two bidders who can search for outside prices while bidding in the auction. Each bidder has a search cost which is her private information. When outside prices are private (independently drawn and identically distributed), then, there is an equilibrium in which bidders with the lower search costs bid only late and always search, while the bidders with higher search costs bid both early and late and search as if they coordinated their search decisions, i.e., the bidder with the lower search cost searches and the other bidder does not. This equilibrium by itself provides an explanation of two frequently occurring bidding patterns (late and multiple bidding). In the second chapter I study experimentally the effect of early bids in dynamic auctions on how bidders search for outside prices. The design has two bidders participating in an ascending clock-auction during which any one of the bidders can pause the auction clock. This I interpret as placing an early bid. Once the auction is paused both bidders can simultaneously search for an alternative outside price. Results indicate that pausing decisions by subjects impact their subsequent searching for outside prices, i.e., whether a subject decides to search or not depends on whether she has paused the auction or not. Subjects behave as if they coordinated their searching decisions: the bidder who pauses the auction also searches with high frequency and the other bidder does not. Because this type of behavior increases both the efficiency and the profitability of the auction we favor the use of policies that promote early bidding in practice, such as, longer auctions and lower public reserve prices.en_US
dc.typetexten_US
dc.typeElectronic Dissertationen_US
dc.subjectauctionsen_US
dc.subjectbiddingen_US
dc.subjectInterneten_US
dc.subjecte-commerceen_US
thesis.degree.namePhDen_US
thesis.degree.leveldoctoralen_US
thesis.degree.disciplineEconomicsen_US
thesis.degree.disciplineGraduate Collegeen_US
thesis.degree.grantorUniversity of Arizonaen_US
dc.contributor.advisorWooders, John C.en_US
dc.contributor.chairWooders, John C.en_US
dc.contributor.committeememberWalker, Marken_US
dc.contributor.committeememberOaxaca, Ronald L.en_US
dc.identifier.proquest1896en_US
dc.identifier.oclc659746459en_US
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