Effects of minimum bid increment in internet auctions: Evidence from a field experiment
Tukiainen, Janne (2013-02-15)
Tukiainen, Janne
Valtion taloudellinen tutkimuskeskus VATT
15.02.2013
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Julkaisun pysyvä osoite on
https://urn.fi/URN:ISBN:978-952-274-057-1
https://urn.fi/URN:ISBN:978-952-274-057-1
Tiivistelmä
I study the role of minimum bid increments (MBI) in internet auctions using natural field experiment
data from a Finnish online auction site Huuto.net. Internet auctions are typically viewed as secondprice,
implying truthful bidding. However, due to the presence of the MBI, equilibrium bidding behavior
involves bid shading. I sell otherwise identical gift cards while varying the MBI and test between truthful
bidding and bid shading. Truthful bidding is rejected. Consistently with equilibrium behavior, bid
shading increases as the MBI increases. This implies that real-world bidders are capable of reacting
rationally even to seemingly small variations in their strategic environment.
This version (September 17, 2015) replaces the February 15, 2013 version.
data from a Finnish online auction site Huuto.net. Internet auctions are typically viewed as secondprice,
implying truthful bidding. However, due to the presence of the MBI, equilibrium bidding behavior
involves bid shading. I sell otherwise identical gift cards while varying the MBI and test between truthful
bidding and bid shading. Truthful bidding is rejected. Consistently with equilibrium behavior, bid
shading increases as the MBI increases. This implies that real-world bidders are capable of reacting
rationally even to seemingly small variations in their strategic environment.
This version (September 17, 2015) replaces the February 15, 2013 version.
Tutkimusteema
Public services, Julkiset palvelut, Effectiveness of public services, Julkisten palvelujen vaikuttavuus
JEL
C520 - Model Evaluation and Testing, C720 - Noncooperative Games, C930 - Field Experiments, D440 - Auctions, L810 - Retail and Wholesale Trade; Warehousing; e-Commerce
Avainsanat
Field experiment, internet auctions, minimum bid increment, revenue, strategic bidding
Kokoelmat
- VATT Working Papers [164]