Effects of minimum bid increment in internet auctions: Evidence from a field experiment
Janne Tukiainen
No 44, Working Papers from VATT Institute for Economic Research
Abstract:
I study the role of minimum bid increments (MBI) in internet auctions using natural field experiment data from a Finnish online auction site Huuto.net. Internet auctions are typically viewed as secondprice, implying truthful bidding. However, due to the presence of the MBI, equilibrium bidding behavior involves bid shading. I sell otherwise identical gift cards while varying the MBI and test between truthful bidding and bid shading. Truthful bidding is rejected. Consistently with equilibrium behavior, bid shading increases as the MBI increases. This implies that real-world bidders are capable of reacting rationally even to seemingly small variations in their strategic environment. This version (September 17, 2015) replaces the February 15, 2013 version.
Keywords: Field experiment, internet auctions, minimum bid increment, revenue, strategic bidding, Public services, Julkiset palvelut, Effectiveness of public services, Julkisten palvelujen vaikuttavuus, C520 - Model Evaluation and Testing, C720 - Noncooperative Games, C930 - Field Experiments, D440 - Auctions, L810 - Retail and Wholesale Trade; Warehousing; e-Commerce, (search for similar items in EconPapers)
Date: 2013
New Economics Papers: this item is included in nep-com, nep-exp and nep-gth
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Citations: View citations in EconPapers (2)
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https://www.doria.fi/handle/10024/148782
Related works:
Journal Article: Effects of Minimum Bid Increments in Internet Auctions: Evidence from a Field Experiment (2017)
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