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?
First, buy prices are used more frequently as the number of BPE bidders increases in every case except for TEMP/NOPROXY with a buy price of 25.
To further quantify these effects, Table 6 presents the results of three probit regressions in which the dependent variable is 1 if an auction ended with the buy price being accepted by the winning bidder and 0 otherwise.
From these regressions, it can be observed that buy price type is not particularly important in determining buy price utilization (the coefficient on PERM does have the expected positive sign, but is not statistically significant), that utilization is more likely in those auctions with more competition in the form of two BPE bidders, and that utilization is highest for a buy price of 25 and lowest for a buy price of 75, when compared to the reference group of 50.
This figure shows the number of bids made during each of 20 equal-length intervals during the auctions, both by institution and buy price type.
22) This may be one of the reasons why eBay combines a temporary rather than a permanent buy price with its proxy bidding institution.
In addition to the early bidding evident in auctions with a buy price, there is also a large amount of late bidding that occurs in all auctions, even those without buy prices.
Table 7 presents the percentage of auctions that are efficient across treatments and institutions, both in the aggregate and also broken down by buy price eligibility and buy price level.
To examine the possible connection between late bidding/sniping and efficiency, the presence of sniping was defined, albeit somewhat arbitrarily, as a winning bid that was submitted in the last 3 seconds of an auction (including auctions that ended with a buy price acceptance).
Given the evidence of widespread and highly variable late bidding across institutions, Table 8 presents a final set of probit regressions that explore the role of buy price type, as well as the number of BPE bidders with regards to efficiency.
It is unclear whether a given NO auction should correspond to the case of 0, 1, or 2 buy price eligible bidders, as there is no buy price for comparison.
The potential effects of buy price eligibility suggested above hold true in all three sets of regressions, though they vary in strength across institutions depending on the type of buy price used.