The Impact of the Irrelevant: Temporary Buy-Options and Bidding Behavior in Auctions
With a laboratory experiment, we study the impact of buy-options and the corresponding buy-price on revenues and bidding behavior in (online) proxy-auctions with independent private valuations. We show that temporary buy-options may reduce revenues for two reasons: At low buy-prices, the application...
| Main Authors: | , , , |
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| Format: | Article |
| Language: | English |
| Published: |
MDPI AG
2016-03-01
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| Series: | Games |
| Subjects: | |
| Online Access: | http://www.mdpi.com/2073-4336/7/1/8 |
| _version_ | 1819210303092555776 |
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| author | Ronald Peeters Martin Strobel Dries Vermeulen Markus Walzl |
| author_facet | Ronald Peeters Martin Strobel Dries Vermeulen Markus Walzl |
| author_sort | Ronald Peeters |
| collection | DOAJ |
| description | With a laboratory experiment, we study the impact of buy-options and the corresponding buy-price on revenues and bidding behavior in (online) proxy-auctions with independent private valuations. We show that temporary buy-options may reduce revenues for two reasons: At low buy-prices, the application of the buy-option avoids revenue-enhancing bidding; at high buy-prices, bidders are reluctant to bid above the option price (even though the option is no longer available once an auction has started). The latter suggests a particular type of anchoring, where bidders use the buy-price to update their expectations about the strengths of their opponents. |
| first_indexed | 2024-12-23T06:09:02Z |
| format | Article |
| id | doaj.art-58748b7ba0f44fd28c2d9008f7517e90 |
| institution | Directory Open Access Journal |
| issn | 2073-4336 |
| language | English |
| last_indexed | 2024-12-23T06:09:02Z |
| publishDate | 2016-03-01 |
| publisher | MDPI AG |
| record_format | Article |
| series | Games |
| spelling | doaj.art-58748b7ba0f44fd28c2d9008f7517e902022-12-21T17:57:30ZengMDPI AGGames2073-43362016-03-0171810.3390/g7010008g7010008The Impact of the Irrelevant: Temporary Buy-Options and Bidding Behavior in AuctionsRonald Peeters0Martin Strobel1Dries Vermeulen2Markus Walzl3Department of Economics, Maastricht University, P.O. Box 616, Maastricht 6200 MD, The NetherlandsDepartment of Economics, Maastricht University, P.O. Box 616, Maastricht 6200 MD, The NetherlandsDepartment of Quantitative Economics, Maastricht University, P.O. Box 616, Maastricht 6200 MD, The NetherlandsDepartment of Economics, Innsbruck University, Universitätsstr. 15, Innsbruck A-6020, AustriaWith a laboratory experiment, we study the impact of buy-options and the corresponding buy-price on revenues and bidding behavior in (online) proxy-auctions with independent private valuations. We show that temporary buy-options may reduce revenues for two reasons: At low buy-prices, the application of the buy-option avoids revenue-enhancing bidding; at high buy-prices, bidders are reluctant to bid above the option price (even though the option is no longer available once an auction has started). The latter suggests a particular type of anchoring, where bidders use the buy-price to update their expectations about the strengths of their opponents.http://www.mdpi.com/2073-4336/7/1/8buy-optionsonline auctionsexperimentsanchoringC72C91D44D82 |
| spellingShingle | Ronald Peeters Martin Strobel Dries Vermeulen Markus Walzl The Impact of the Irrelevant: Temporary Buy-Options and Bidding Behavior in Auctions Games buy-options online auctions experiments anchoring C72 C91 D44 D82 |
| title | The Impact of the Irrelevant: Temporary Buy-Options and Bidding Behavior in Auctions |
| title_full | The Impact of the Irrelevant: Temporary Buy-Options and Bidding Behavior in Auctions |
| title_fullStr | The Impact of the Irrelevant: Temporary Buy-Options and Bidding Behavior in Auctions |
| title_full_unstemmed | The Impact of the Irrelevant: Temporary Buy-Options and Bidding Behavior in Auctions |
| title_short | The Impact of the Irrelevant: Temporary Buy-Options and Bidding Behavior in Auctions |
| title_sort | impact of the irrelevant temporary buy options and bidding behavior in auctions |
| topic | buy-options online auctions experiments anchoring C72 C91 D44 D82 |
| url | http://www.mdpi.com/2073-4336/7/1/8 |
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