When bidders are risk neutral, a temporary buy price raises strictly less revenue than the same auction run without a buy price.
3) Mathews (2004) examines a temporary buy price theoretically and finds that when the seller and/or the bidders are time impatient, a seller can be motivated to choose a buy price that is exercised with positive probability by the bidders.
This study is an exploration into the revenue, utilization, bid timing, and efficiency differences that arise when using a permanent or temporary buy price and how these differences are affected by the presence or absence of proxy bidding in a controlled laboratory setting.
and permanent buy price in a single institution that captured many of the characteristics of both eBay and Yahoo
After observing the results from the first set of experiments, we decided to further explore the effects of a buy price in a setting that more closely matches that of the institution used by eBay, the current market leader in the United States.
He maintains that eBay's use of proxy bidding as well as a temporary buy price are both efforts to attract more buyers (and in turn more sellers) to the site by encouraging early bidding.
In four of the sessions, the buy price was permanent (PERM) and remained available throughout each auction.
The three 10-period blocks used in the Treatment Stage allow the high, medium, and low buy price to be offered to each value pairing.
The effects of a buy price on revenue will certainly be important to sellers, and therefore to an auction house that wishes to attract more sellers.
Figures 1 and 2 present empirical density functions of all the revenue data for all buy price types, levels, and institutions.
Table 3 reports six fixed-effects regressions (each row in the table is a separate regression) with comparisons of each of the buy price types to the baseline case, as well as a comparison of the two buy price types.
ij] is the price in the ith auction in session j, and PERM and TEMP represent the two different buy price types.
Second, if we ignore the auctions with a buy price of 25 and use the "BP = 50 or BP = 75" subset, the TEMP auctions also generate higher revenue than NO auctions (though significant at only 12.
In discussing a bidder's utilization of a buy price, it is important to distinguish between bidders whose use of the buy price is precluded by a low-value draw and those whose use is not.
In considering how often buy prices are utilized by the bidders, there are three related questions: (1) does buy price utilization vary between buy price types, (2) does buy price utilization vary across institutions, and (3) how does buy price utilization vary with buy price level?