Auctions with a buy price

Stanley S. Reynolds; John Wooders

doi:10.1007/s00199-006-0182-7

Auctions with a buy price

Stanley S. Reynolds, John Wooders

Economics

Research output: Contribution to journal › Article › peer-review

Abstract

eBay and Yahoo allow sellers to list their auctions with a buy price at which a bidder may purchase the item immediately. On eBay, the buy-now option disappears once a bid is placed, while on Yahoo the buy-now option remains in effect throughout the auction. We show that when bidders are risk averse, both types of auctions raise seller revenue for a wide range of buy prices. The Yahoo format raises more revenue than the eBay format when bidders have either CARA or DARA. Bidders with DARA prefer the eBay auction, while bidders with CARA are indifferent between the two.

Original language	English (US)
Pages (from-to)	9-39
Number of pages	31
Journal	Economic Theory
Volume	38
Issue number	1
DOIs	https://doi.org/10.1007/s00199-006-0182-7
State	Published - Jan 2009

Keywords

Auction
Buy price
Risk aversion
Yahoo
eBay

ASJC Scopus subject areas

Economics and Econometrics

Access to Document

10.1007/s00199-006-0182-7

Cite this

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Auctions with a buy price

Abstract

Keywords

ASJC Scopus subject areas

Access to Document

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