“Bid more, pay less” – overbidding and the Bidder’s curse in teleshopping auctions

Fabian Ocker ()
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Fabian Ocker: Karlsruhe Institute of Technology (KIT)

Electronic Markets, 2018, vol. 28, issue 4, No 8, 508 pages

Abstract: Abstract This paper provides a theoretical and empirical analysis of the multi-unit Dutch teleshopping auctions of 1–2–3.tv. There are two channels for sales transactions: Customers either bid in the teleshopping auctions or purchase in the online shop for a simultaneously available fixed price. Our theoretical analysis indicates that profit-maximizing customers do not overbid the fixed price, since they risk experiencing the Bidder’s Curse: Buying at a uniform auction price that is higher than the fixed price. Our data set includes nearly 700,000 recorded bids. We find that customers overbid in 26% of all bids, but the Bidder’s Curse only occurs in 5% of all auctions. Offline-bidders (telephone calls) overbid both by larger amounts and more often than do online-bidders (website or app), and, on average, the most frequent customers do not experience learning effects.

Keywords: Bidder’s curse; Multi-unit auction; Online auction; Search cost; Teleshopping auction (search for similar items in EconPapers)
JEL-codes: D12 D44 (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (2)

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DOI: 10.1007/s12525-018-0295-4

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