The sequential auction problem on eBay: an empirical analysis and a solution

13 years 10 months ago

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Bidders on eBay have no dominant bidding strategy when faced with multiple auctions each oﬀering an item of interest. As seen through an analysis of 1,956 auctions on eBay for a Dell E193FP LCD monitor, some bidders win auctions at prices higher than those of other available auctions, while others never win an auction despite placing bids in losing eﬀorts that are greater than the closing prices of other available auctions. These misqueues in strategic behavior hamper the eﬃciency of the system, and in so doing limit the revenue potential for sellers. This paper proposes a novel options-based extension to eBay’s proxy-bidding system that resolves this strategic issue for buyers in commoditized markets. An empirical analysis of eBay provides a basis for computer simulations that investigate the market eﬀects of the options-based scheme, and demonstrates that the options-based scheme provides greater eﬃciency than eBay, while also increasing seller revenue. Categories and Su...

Adam I. Juda, David C. Parkes

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