Author

  • Feng Jiao

    • Desautels Faculty of Management, McGill University, Canada
    • Canada

Abstract

This paper analyzes the secret reservation price in eBay auctions. Under the assumptions of secret and public reservation price, the bidders choose the optimal bidding function and the seller selects equilibrium reservation price. This model argues that the choice of secret reservation price is rational for the seller, as they can generate higher revenue in certain conditions. It predicts that, under endogenous entry, secret reservation price leads to higher revenue since it attracts more bidders to the auction. This effect is more noticeable for luxury goods. However, secret and public reservation prices generate identical revenue for the seller if entry is exogenous. Furthermore, the results are supported by numerous recent empirical works.

Keywords

References

  • Bajari, P. & Hortaçsu, A. (2003). The Winner's Curse, Reserve Prices, and Endogenous Entry: Empirical Insights from eBay Auctions. The RAND Journal of Economics, 34 (2), 329-355.
  • Elyakime, B., Laffont, J. J., Loisel, P. & Vuong, Q. (1997). Auctioning and Bargaining: An Econometric Study of Timber Auctions with Secret Reservation Prices. Journal of Business & Economic Statistics, 15 (2), 209-220.
  • Elyakime, B., Laffont, J. J., Loisel, P., & Vuong, Q. (1994). First-Price Sealed-Bid Auctions with Secret Reservation Prices. Annals of Economics and Statistics / Annales d'Économie et de Statistique (34), 115-141.
  • Hinz, O., & Spann, M. (2008). The Impact of Information Diffusion on Bidding Behavior in Secret Reserve Price Auctions. Information Systems Research, 19 (3), 351-368.
  • Katkar, R., & Reiley, D. H. (2007). Public versus Secret Reserve Prices in eBay Auctions: Results from a Pokémon Field Experiment. The BE Journal of Economic Analysis Policy , 6(2), 1-32.
  • Levin, D. & Smith, J. L. (1996). Optimal Reservation Prices in Auctions. Economic Journal, 106 (438), 12711283.
  • Lucking-Reiley, D., Bryan, D., Prasad, N. & Reeves, D. (2007). Pennies From eBay: The Determinants of Price in Online Auctions. The Journal of Industrial Economics, 55 (2), 223-233.
  • Menezes, F. M. & Monteiro, P. K. (2000). Auctions with Endogenous Participation. Review of Economic Design, 5 (1), 71-89.
  • Li, H. & Tan, G. (2000). Hidden Reserve Prices with Risk-Averse Bidders. University of British Columbia Working Paper.
  • Vincent, D. (1995). Bidding Off the Wall: Why Reserve Prices May Be Kept Secret. Journal of Economic Theory , 65(2), 575-584,

Downloads

No downloads have been recorded for this article yet. Figures appear here once readers begin downloading the full text.

How to Cite

Jiao, F. (2011). Bidding Behaviors in eBay Auctions: Secret Reservation Price and Endogenous Entry. Journal of Economics and Behavioral Studies, 3(5), 326-331. https://doi.org/10.22610/jebs.v3i5.286

Share this article

License

Author (s) should affirm that the material has not been published previously. It has not been submitted and it is not under consideration by any other journal. At the same time author (s) need to execute a publication permission agreement to assume the responsibility of the submitted content and any omissions and errors therein. After submission of revised paper in the light of suggestions of the reviewers, the editorial team  edits and formats manuscripts to bring uniformity and standardization in published material.

This work will be licensed under Creative Commons Attribution 4.0 International (CC BY 4.0) and under condition of the license, users are free to read, copy, remix, transform, redistribute, download, print, search or link to the full texts of articles and even build upon their work as long as they credit the author for the original work. Moreover, as per journal policy author (s) hold and retain copyrights without any restrictions.

Keywords

Section

Research Paper

Published in

Vol. 3 No. 5 (2011) Modelling, Markets & Managerial Behaviour View issue contents

Published

2011-11-15

Submissions

Have research to publish? Journal of Economics and Behavioral Studies welcomes submissions.

Make a Submission