The Bidder's Curse: Comment

Henry Schneider

American Economic Review, 2016, vol. 106, issue 4, 1182-94

Abstract: The prices of auctions on eBay often exceed eBay's fixed-price "Buy- It-Now" prices. I investigate the causes of this overbidding, focusing on the interpretation in Malmendier and Lee (2011) that the observed overbidding cannot be explained "without allowing for nonstandard preferences or beliefs" and that the "strongest direct evidence points to limited attention." Using data from their study and new data from eBay, I provide evidence that a key condition for identifying nonstandard behavior may not have been met, and that the observed overbidding is not inconsistent with standard behavior once we allow for the likely presence of search costs. (JEL D12, D44, D83)

JEL-codes: D12 D44 D83 (search for similar items in EconPapers)
Date: 2016
Note: DOI: 10.1257/aer.20120767
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Citations: View citations in EconPapers (8)

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