Bidding Strategies and Consumer Savings in NYOP Auctions

Mingyu Joo, Tridib Mazumdar and S.P. Raj

Journal of Retailing, 2012, vol. 88, issue 1, 180-188

Abstract: We investigate how bidding strategies of successful bidders influence the savings they derive from a Name Your Own Price (NYOP) retailer relative to buying the same product from a retailer who posts prices. Utilizing bidding data for hotel room purchases we demonstrate that consumer savings rate depends positively on consumer decision to haggle (# bids ≥3) and on the shape of the bid function. Relative to non-hagglers (# bids ≤2), hagglers who employ a constant bid increment (i.e., a linear) strategy and a decreasing bid increment (i.e., concave) strategy save more, while those who employ an increasing bid increment strategy (i.e., convex) fare no better. A post hoc analysis also shows that hagglers place many bids in the pursuit of higher quality products, while non-hagglers save friction costs by sacrificing quality (e.g., targeting lower star hotels and adjusting the days of travel).

Keywords: Name Your Own Price auction; Reverse auction; NYOP retailers; Priceline; Bidding strategy; Haggling (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jouret:v:88:y:2012:i:1:p:180-188

DOI: 10.1016/j.jretai.2011.07.004

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