Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/185767
Authors: 
Grebe, Tim
Ivanova-Stenzel, Radosveta
Kröger, Sabine
Year of Publication: 
2018
Series/Report no.: 
Discussion Paper No. 97
Abstract: 
In Buy-It-Now (BIN, hereafter) auctions, sellers can make a \"take-it-or-leave-it\" price offer (BIN price) prior to an auction. We analyse experimentally how eBay sellers set BIN prices and whether they benefit from offering them. Using the real eBay environment in the laboratory, we find that the eBay auction format supports deviations from truthful bidding leading to auction prices substantially below those expected in second-price auctions. Our results reveal that the observed price deviations are not an artefact due to the existence of the BIN price, rather a consequence of the specific features of the eBay-auction format - a mixture between sealed-bid and open second-price auction with a fixed end-time. Moreover, we find that information available on eBay can be used as indicator for the price deviation and that sellers respond strategically to this information. Seller risk aversion does not affect BIN prices and more experienced sellers ask for higher BIN prices. The introduction of BIN prices to eBay auctions has an enhancing effect: the eBay BIN auction is more efficient and generates significantly higher revenue compared to a standard eBay auction without a BIN price.
Subjects: 
experience
online markets
ebay
bin price
private value
experiment
JEL: 
C72
C91
D44
D82
L01
Document Type: 
Working Paper

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