 How do sellers benefit from Buy-It-Now prices in eBay auctions?Tim Grebe, Radosveta Ivanova-Stenzel and Sabine Kröger Journal of Economic Behavior & Organization, 2021, vol. 183, issue C, 189-205 Abstract: In eBay “Buy-It-Now” auctions, sellers make a take-it-or-leave-it price (BIN-price) offer prior to the auction. A buyer can either buy the good at the BIN-price or start the auction. This article studies how eBay sellers set BIN-prices and whether they benefit from using them. We apply a new experimental approach that combines the advantages of the lab and the field: The experiment is conducted in the lab while using the eBay auction platform and eBay traders. We find that the eBay auction format leads to prices substantially below those expected in second-price auctions. Moreover, the publicly available information on eBay about buyer experience and bidding behavior correlates with the observed price deviation and sellers use this information strategically when deciding on their BIN-price. More experienced sellers ask for higher BIN-prices, whereas seller risk aversion does not affect their BIN-price. Compared to an eBay auction without a BIN-price, an auction with a BIN-price is more efficient and generates significantly higher revenue. Keywords: Buy-It-Now price; eBay; Experience; Experiment; Online markets; Private-value auction (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:183:y:2021:i:c:p:189-205 DOI: 10.1016/j.jebo.2020.12.015 Access Statistics for this article Journal of Economic Behavior & Organization is currently edited by Houser, D. and Puzzello, D. More articles in Journal of Economic Behavior & Organization from Elsevier |
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