The impact of the irrelevant: temporary buy-options and bidding behavior in auctions (Q1651850)
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scientific article; zbMATH DE number 6901004
| Language | Label | Description | Also known as |
|---|---|---|---|
| English | The impact of the irrelevant: temporary buy-options and bidding behavior in auctions |
scientific article; zbMATH DE number 6901004 |
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The impact of the irrelevant: temporary buy-options and bidding behavior in auctions (English)
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10 July 2018
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Summary: With a laboratory experiment, we study the impact of buy-options and the corresponding buy-price on revenues and bidding behavior in (online) proxy-auctions with independent private valuations. We show that temporary buy-options may reduce revenues for two reasons: At low buy-prices, the application of the buy-option avoids revenue-enhancing bidding; at high buy-prices, bidders are reluctant to bid above the option price (even though the option is no longer available once an auction has started). The latter suggests a particular type of anchoring, where bidders use the buy-price to update their expectations about the strengths of their opponents.
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buy-options
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online auctions
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experiments
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anchoring
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