A Simulation-Based Model for Final Price Prediction in Online Auctions

Shihyu Chou, Chin-Shien Lin, Chi-hong Chen, Tai-Ru Ho and Yu-Chen Hsieh
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Shihyu Chou: Department of Marketing, National Chung Hsing University, Taiwan
Chin-Shien Lin: Department of Business Administration, National Chung Hsing University, Taiwan
Chi-hong Chen: Institute of Electronic Commerce, National Chung Hsing , Taiwan
Tai-Ru Ho: Institute of Electronic Commerce, National Chung Hsing , Taiwan
Yu-Chen Hsieh: Educational Measurement and Statistics, National Taichung Teachers College, Taiwan

Journal of Economics and Management, 2007, vol. 3, issue 1, 1-16

Abstract: Online auctions, a profitable, exciting, and dynamic part of e-commerce, have enjoyed increasing public interest. However, there is still a paucity of literature on final price prediction for online auctions. Although Markov process models provide a mathematical approach to predicting online auction prices, estimating parameters of a Markov process model in practice is a challenging task. In this paper we propose a simulation-based model as an alternative approach to predicting the final price in online auctions. The simulation results show that the proposed model can predict the final price more accurately than a Markov process model. Additionally, the consistent lower predictions of the Markov process model suggest a direction for future research into improving performance in both models.

Keywords: Markov process; simulation; e-commerce; auction; final price prediction (search for similar items in EconPapers)
JEL-codes: C15 D44 D61 (search for similar items in EconPapers)
Date: 2007
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