Decision Sciences
5 years ago

Posted prices in auctions shift bidding behavior, giving auctioneers more power.

Bidding Behavior and Dynamic Pricing in Markets with Auctions and Posted Prices
Fábio Sanches, Bruno de Paula Rocha, José Carlos Silva

Paper Summary

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The study looked at how having a fixed price option affects how people bid in auctions like eBay. They found that having a fixed price option changes how people bid in auctions, both directly and indirectly. When buyers' values are spread out evenly, the length of the auction has a bigger impact on bidding than the fixed price option. This means that auctioneers can control the game by adjusting the auction length. These findings add to our understanding of how people bid in auctions with fixed prices.