The Bidder's Curse: Comment

The Bidder's Curse: Comment

The prices of auctions on eBay often exceed eBay's fixed-price "Buy-It-Now" prices. I investigate the causes of this overbidding, focusing on the interpretation in Malmendier and Lee (2011) that the observed overbidding cannot be explained "without allowing for nonstandard prefer...

Full description

Saved in:
Bibliographic Details
Published in:The American economic review Vol. 106; no. 4; pp. 1182 - 1194
Main Author: Schneider, Henry S.
Format: Journal Article
Language:English
Published: Nashville American Economic Association 01-04-2016
Subjects:
Auctions
Bidders
Bids
Costs
Economics
Electronic commerce
Prices
Shorter Papers
Statistical analysis
United States > US
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:The prices of auctions on eBay often exceed eBay's fixed-price "Buy-It-Now" prices. I investigate the causes of this overbidding, focusing on the interpretation in Malmendier and Lee (2011) that the observed overbidding cannot be explained "without allowing for nonstandard preferences or beliefs" and that the "strongest direct evidence points to limited attention" Using data from their study and new data from eBay, I provide evidence that a key condition for identifying nonstandard behavior may not have been met, and that the observed overbidding is not inconsistent with standard behavior once we allow for the likely presence of search costs.
ISSN:0002-8282
1944-7981
DOI:10.1257/aer.20120767