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Article
Publication date: 25 September 2007

Jianwei Hou

The purpose of this study is two‐fold. First, this study aims to examine how late bidding may have an effect on the auction price. Second, this study seeks to investigate how this…

1758

Abstract

Purpose

The purpose of this study is two‐fold. First, this study aims to examine how late bidding may have an effect on the auction price. Second, this study seeks to investigate how this effect can be moderated by different types of auctions.

Design/methodology/approach

Data on computer CPUs were collected at eBay. A multiple regression analysis was performed to examine the effect of late bidding on price.

Findings

Empirical results indicate that late bidding decreases the auction price and the result is robust. This study, however, does not find support for the moderating role of the auction type (IPV vs APV) on the effect of late bidding on price.

Research limitations/implications

This paper selects an extremely competitive market with many sellers and bidders. Future research may expand this study by examining late bidding under different combinations of market structures (competitive vs less competitive) and auction models (IPV vs APV vs CV).

Originality/value

This paper is the first study that empirically tests the effect of late bidding on the auction price.

Details

Journal of Product & Brand Management, vol. 16 no. 6
Type: Research Article
ISSN: 1061-0421

Keywords

Article
Publication date: 20 February 2019

Kacy K. Kim, Michael J. Gravier, Sukki Yoon and Sangdo Oh

The purpose of this paper is to contrast two lay theories of how consumers draw affective inferences about their online bidding experiences. The active-bidder theory (smart-bidder…

480

Abstract

Purpose

The purpose of this paper is to contrast two lay theories of how consumers draw affective inferences about their online bidding experiences. The active-bidder theory (smart-bidder theory) predicts that after winning a bid, highly (minimally) participative bidders would be more satisfied than minimally (highly) participative bidders.

Design/methodology/approach

Four experiments test two competing hypotheses, the active-bidder hypothesis and the smart-bidder hypothesis (Study 1), identify a condition that mitigates the observed effects (Study 2), identify when the mitigation is effective or ineffective (Study 3) and replicate the findings in a scenario-based study where participants are allowed to make actual bidding decisions (Studies 4A and 4B).

Findings

The findings support the smart-bidder hypothesis across three different product categories; however, this heuristic-driven effect is absent when bidders have concrete shopping goals. The effect was sufficiently robust to be observed even when the bids are made at will.

Research limitations/implications

The present research does not incorporate the widely adopted procedure of second-price auction (also known as proxy bidding in the eBay setting), a system that allows the highest bidder to win the auction but pay the amount of the second-highest bid.

Practical implications

Online consumers should be mindful that entering the minimum number of bids not only helps consumers avoid overbidding but also elevates their joy in winning after the auction ends.

Originality/value

Prior research on bidding behavior on online auction sites has yet to examine how different bidding dynamics affect consumers’ post-auction satisfaction. This research sheds light on the psychological process underlying the robust phenomenon: online auction consumers rely heavily on proxy signals. Bidders appear to use the efficiency heuristic in constructing their affective judgments of their buying experiences.

Details

European Journal of Marketing, vol. 53 no. 4
Type: Research Article
ISSN: 0309-0566

Keywords

Article
Publication date: 26 July 2018

Rosane Hungria-Gunnelin

This paper aims to empirically test the effect of list price and bidding strategies in ascending auctions of residential real estate.

Abstract

Purpose

This paper aims to empirically test the effect of list price and bidding strategies in ascending auctions of residential real estate.

Design/methodology/approach

Three regression models are estimated, using a unique data set from 629 condominium apartments in the inner-city of Stockholm, Sweden, sold between January 2010 and December 2011.

Findings

The results show that jump bidding has the predicted effect of reducing competition by scaring off bidders. However, a higher average bid increment leads to a higher selling price. Furthermore, results show that a fast auction in terms of average time between bids acts to increase the probability of so-called auction fever as both the number of bidders and the selling price are positively correlated with the speed of the auction. While the average behavior of all auction participants, in terms of jump bidding and time between bids, significantly affects auction outcomes, differences in strategies applied by winners and losers show mixed results. The results of this study with respect to sellers’ list price strategy show that underpricing is an ineffective strategy in terms of enticing more bidders to participate in the auction. Furthermore, underpricing is not sufficient to have a positive effect on the selling price.

Originality/value

This paper is one of the first papers to empirically analyze how different bidding strategies affect the outcome of residential real estate auctions in terms of competition and the final selling price.

Details

Journal of European Real Estate Research, vol. 11 no. 2
Type: Research Article
ISSN: 1753-9269

Keywords

Article
Publication date: 30 November 2007

Vladimir Hlasny

The purpose of this paper is to present implications of the seller's ability to bid in the four classical auction forms, with independent private values: English, Dutch, first…

Abstract

Purpose

The purpose of this paper is to present implications of the seller's ability to bid in the four classical auction forms, with independent private values: English, Dutch, first‐ and second‐price auctions.

Design/methodology/approach

Under each auction form, the identity of the winning bidder and the expected winning bid are compared between the case when the seller may bid and when he cannot, using equilibrium bidder strategies. The seller's incentive to bid is evaluated.

Findings

The strategies and the welfare results differ with auction type and underlying information assumptions – bidders are either aware or unaware of the seller's ability to bid. In the Dutch and the first‐price auctions, seller‐bidding does not affect any classical results. In the English and the second‐price auctions, it leads to no lower expected prices than without it and higher prices with positive probability. In the English and the second‐price auctions, the seller bids above his reservation value and may unintentionally win the auction. These auctions result in inefficiency with positive probability.

Practical implications

The English and the second‐price auctions are the most common real‐world auctions. In these auctions, the seller's ability to bid – secretly or publicly – redistributes welfare among participants and introduces a possibility of inefficiency. Making this ability publicly known does not solve the latter problem. Auctioneers must prevent the seller from bidding, or must select a different auction form when seller‐bidding is anticipated.

Originality/value

The paper clarifies to regulators, auction designers, bidders, and other readers which auction forms are susceptible to subversion by seller‐bidding and what the potential damages are.

Details

Journal of Information, Communication and Ethics in Society, vol. 5 no. 4
Type: Research Article
ISSN: 1477-996X

Keywords

Article
Publication date: 14 June 2013

Shao‐Kang Lo, Yu‐Ping Chiu and Ai‐Yun Hsieh

This paper concentrates on the visual information within a product description block in an online auction page, which is the only place a seller can manipulate to influence…

Abstract

Purpose

This paper concentrates on the visual information within a product description block in an online auction page, which is the only place a seller can manipulate to influence bidders. The purpose of this paper is to examine the effects of photograph use, model use, and the physical attractiveness of the model on bidding behavior.

Design/methodology/approach

A mock online auction website was built to manipulate picture use, model use, and the physical attractiveness of the model. The experiment recruited volunteers and randomly assigned each participant into one of four treatments. After experiencing the stimulus for two minutes, the researchers asked participants to evaluate their bidding intention and write down the highest price they would bid.

Findings

The results show that using a photograph to introduce the product acquires a higher bidding intention and bidding amount than not using a photograph. In addition, a web page using physically attractive models in photographs acquires a higher bidding intention and bidding price than a web page using physically unattractive models in photographs.

Originality/value

This study is unique in discussing the effect of the visual content of the product description block on online bidding behavior. The results of this study provide suggestions and a product information presentation strategy for online auction sellers.

Details

Online Information Review, vol. 37 no. 3
Type: Research Article
ISSN: 1468-4527

Keywords

Article
Publication date: 11 October 2018

Djoen San Santoso and Nuttapon Bourpanus

This study aims to examine the influences of shifting the bidding system of Thai public infrastructure projects from e-auction to e-bidding.

Abstract

Purpose

This study aims to examine the influences of shifting the bidding system of Thai public infrastructure projects from e-auction to e-bidding.

Design/methodology/approach

A questionnaire survey was conducted with owners or senior managers with direct responsibility in deciding the mark-up of 72 small and medium-sized contractor firms. Five senior professionals were interviewed to provide insights into and to strengthen the discussion of the findings. The Wilcoxon test was applied to analyze the difference in the importance of the factors between e-auction and e-bidding.

Findings

The results revealed a shift in the importance of the factors, from those related to the financial aspects in the e-auction to the situational aspects in the e-bidding. The comparison test results also suggested that the majority of factors become significantly less important in the e-bidding system, with “identity of competitors” and “general expense of the bidding process” having the most apparent mean differences. The interview results supported by data on winning prices and estimations strongly indicated that bid collusions likely exist in the e-auction. By shifting to e-bidding, the data also show that the Thai Government can save public money in its infrastructure project development.

Originality/value

The study provides an analysis from the perspectives of contractor firms on how e-auction and e-bidding options influence bid mark-up decisions. Many studies have focused on the issues and advantages provided by the e-procurement mainly from the owner (government)’s perspective but how the change influences the contractor’s attitude has been less explored.

Details

Journal of Financial Management of Property and Construction, vol. 24 no. 1
Type: Research Article
ISSN: 1366-4387

Keywords

Article
Publication date: 1 March 2012

Anders Lunander and Sofia Lundberg

This paper is an empirical analysis of first-price sealed-bid procurement auctions in Sweden, with and without combinatorial bidding. The data comprises procurement auctions of…

Abstract

This paper is an empirical analysis of first-price sealed-bid procurement auctions in Sweden, with and without combinatorial bidding. The data comprises procurement auctions of identical contracts (road resurfacing) with identical bidders conducted under the same time period (2009-2011) in two different regions in Sweden. Given the comparison of the suppliersʼ offered price per tons of asphalt, we cannot reject the hypothesis of identical distribution of standalone bids generated in both types of auction. The distribution of package bids within the combinatorial format is significantly lower than the distribution of standalone bids within the non-combinatorial format, suggesting substantial cost reduction of allowing package bidding. Also, within the combinatorial format, our analysis of data indicates higher costs when packages are predetermined by the purchaser rather than chosen freely by the suppliers.

Details

Journal of Public Procurement, vol. 12 no. 3
Type: Research Article
ISSN: 1535-0118

Article
Publication date: 1 March 2004

Ohad Soudry

The reverse electronic auction is a new competitive bidding procedure adopted by the recently enacted European Community (EC) directives on public procurement. It is submitted…

Abstract

The reverse electronic auction is a new competitive bidding procedure adopted by the recently enacted European Community (EC) directives on public procurement. It is submitted that the electronic reverse auction has the potential to reduce the tension between the European Commission and national policies of procurement, as it can decrease contracting costs, increase transparency and achieve better economic outcomes as a result of increased competition. This paper relies on auction theory in order to support such statements. A comparison between the traditional sealed-bid method and the reverse auction is further provided.

Details

Journal of Public Procurement, vol. 4 no. 3
Type: Research Article
ISSN: 1535-0118

Article
Publication date: 1 March 2012

Anders Lunander and Sofia Lundberg

Combinatorial procurement auctions are increasingly being employed in the private and public sector as an alternative to simultaneous single contract auctions. This mechanism has…

Abstract

Combinatorial procurement auctions are increasingly being employed in the private and public sector as an alternative to simultaneous single contract auctions. This mechanism has the advantage that it enables suppliers to express synergies across bundles of public contracts. This mitigates the exposure problem and also has the potential to both lower the price paid by the procuring authority and to enhance efficiency. This paper provides stylized facts of recently performed combinatorial public procurements in various markets in Sweden.

Details

Journal of Public Procurement, vol. 12 no. 1
Type: Research Article
ISSN: 1535-0118

Article
Publication date: 1 March 2006

Donijo Robbins and Gerald J. Miller

Local public officials rely on tax and non-tax incentive packages to develop their economies. No conclusive evidence supports the economic improvement incentives afford. We…

Abstract

Local public officials rely on tax and non-tax incentive packages to develop their economies. No conclusive evidence supports the economic improvement incentives afford. We investigate, with an experimental approach, the political reasons public officials use tax incentives. The experiment uses simulation gaming to model local economic development as an auction, in that way permitting us to compare the impact that motives, goals, and contexts have on outcomes. Our findings suggest that the majority of economic development competitors fall victim to the “winner’s curse”-overestimating and overbidding the potential payoff for business development.

Details

Journal of Public Budgeting, Accounting & Financial Management, vol. 18 no. 3
Type: Research Article
ISSN: 1096-3367

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