Behavior in second-price auctions by highly experienced eBay buyers and sellers

Rodney J. Garratt, Mark Walker, John Wooders

Research output: Contribution to journalArticlepeer-review

Abstract

We report on sealed-bid second-price auctions that we conducted on the Internet using subjects with substantial prior experience: they were highly experienced participants in eBay auctions. Unlike the novice bidders in previous (laboratory) experiments, the experienced bidders exhibited no greater tendency to overbid than to underbid. However, even subjects with substantial prior experience tended not to bid their values, suggesting that the non-optimal bidding of novice subjects is robust to substantial experience in non-experimental auctions. We found that auction revenue was not significantly different from the expected revenue the auction would generate if bidders bid their values. Auction efficiency, as measured by the percentage of surplus captured, was substantially lower in our SPAs than in previous laboratory experiments.

Original languageEnglish (US)
Pages (from-to)44-57
Number of pages14
JournalExperimental Economics
Volume15
Issue number1
DOIs
StatePublished - Mar 2012

Keywords

  • Auction
  • Experience
  • Sealed bid
  • Second-price
  • eBay

ASJC Scopus subject areas

  • Economics, Econometrics and Finance (miscellaneous)

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