Expectation, Disappointment, and Exit: Evidence on Reference Point Formation from an Online Marketplace

Abstract We study disappointment and platform exit among new bidders in an online auction marketplace. In particular, we study a hybrid auction format with a “Buy-It-Now” option which, when executed, will abruptly end the auction and cancel any standing bids. When this happens, if the formerly leading bidder is new to the platform, then they are 6 percentage points more likely to exit the marketplace for every additional day they spent in the lead. This is rationalized by disappointment-averse bidders with outside options and rational expectations about the likelihood of winning. Our explanation is validated by three ancillary predictions: when expectations are lowered by higher competing bids, there is no effect; sensitivity of exit is declining in prior experience, and, for bidders who do not exit, time in the lead during the first experience predicts a subsequent preference for fixed-price, rather than auction, listings.

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Nibbling, Sniping, and the Role of Uncertainty in Second-Price, Hard-Close Internet Auctions

Electronic Business ◽

10.4018/978-1-60566-056-1.ch094 ◽

2009 ◽

pp. 1526-1539 ◽

Cited By ~ 1

Author(s):

Daniel Friesner ◽

Carl S. Bozman ◽

Matthew Q. McPherson

Keyword(s):

Web Sites ◽

Effective Means ◽

Online Auction ◽

Buyer Behavior ◽

Internet Auctions ◽

Bidding Strategies ◽

Goods And Services ◽

Reservation Prices ◽

Auction Format

Internet auctions have gained widespread appeal as an efficient and effective means of buying and selling goods and services. This study examines buyer behavior on eBay, one of the most wellknown Internet auction Web sites. eBay’s auction format is similar to that of a second-price, hardclose auction, which gives a rational participant an incentive to submit a bid that is equal to his or her maximum willingness to pay. But while traditional second-price, hard-close auctions assume that participants have reliable information about their own and other bidders’ reservation prices, eBay participants usually do not. This raises the possibility that eBay participants may adapt their bidding strategies and not actually bid their reservation prices because of increased uncertainty. In this article, we empirically examine the bidding patterns of online auction participants and compare our findings to the behavior of bidders in more conventional auction settings.

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Nibbling, Sniping, and the Role of Uncertainty in Second-Price, Hard-Close Internet Auctions

Advances in E-Business Research - Transforming E-Business Practices and Applications ◽

10.4018/978-1-60566-910-6.ch010 ◽

2011 ◽

pp. 177-190

Author(s):

Daniel Friesner ◽

Carl S. Bozman ◽

Matthew Q. McPherson

Keyword(s):

Web Sites ◽

Effective Means ◽

Online Auction ◽

Buyer Behavior ◽

Internet Auctions ◽

Bidding Strategies ◽

Goods And Services ◽

Reservation Prices ◽

Auction Format

Internet auctions have gained widespread appeal as an efficient and effective means of buying and selling goods and services. This study examines buyer behavior on eBay, one of the most well-known Internet auction Web sites. eBay’s auction format is similar to that of a second-price, hard-close auction, which gives a rational participant an incentive to submit a bid that is equal to his or her maximum willingness to pay. But while traditional second-price, hard-close auctions assume that participants have reliable information about their own and other bidders’ reservation prices, eBay participants usually do not. This raises the possibility that eBay participants may adapt their bidding strategies and not actually bid their reservation prices because of increased uncertainty. In this article, we empirically examine the bidding patterns of online auction participants and compare our findings to the behavior of bidders in more conventional auction settings.

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The Bidder's Curse

The American Economic Review ◽

10.1257/aer.101.2.749 ◽

2011 ◽

Vol 101 (2) ◽

pp. 749-787 ◽

Cited By ~ 70

Author(s):

Ulrike Malmendier ◽

Young Han Lee

Keyword(s):

Large Fraction ◽

Online Auction ◽

Limited Attention ◽

Board Game ◽

Fixed Price ◽

Novel Approach ◽

Auction Price ◽

Fixed Prices ◽

Auction Prices ◽

Broad Cross Section

We employ a novel approach to identify overbidding in auctions. We compare online auction prices to fixed prices for the same item on the same webpage. In detailed data on auctions of a board game, 42 percent of auctions exceed the simultaneous fixed price. The result replicates in a broad cross-section of auctions (48 percent overbidding). A small fraction of overbidders, 17 percent of bidders, suf fices to generate the large fraction of auctions with overbidding. We show that the observed behavior is inconsistent with rational behavior, even allowing for uncertainty about prices and switching costs, since the expected auction price also exceeds the fixed price. Limited attention best explains our results. (JEL D12, D44)

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Patient Involvement in Treatment Decision Making Can Help or Hinder Placebo Analgesia

Zeitschrift für Psychologie ◽

10.1027/2151-2604/a000179 ◽

2014 ◽

Vol 222 (3) ◽

pp. 165-170 ◽

Cited By ~ 2

Author(s):

Andrew L. Geers ◽

Jason P. Rose ◽

Stephanie L. Fowler ◽

Jill A. Brown

Keyword(s):

Patient Involvement ◽

Cold Water ◽

Prior Experience ◽

Water Immersion ◽

Treatment Decision ◽

Cold Water Immersion ◽

Not Given ◽

Placebo Analgesia ◽

Treatment Decision Making ◽

Immersion Experience

Experiments have found that choosing between placebo analgesics can reduce pain more than being assigned a placebo analgesic. Because earlier research has shown prior experience moderates choice effects in other contexts, we tested whether prior experience with a pain stimulus moderates this placebo-choice association. Before a cold water pain task, participants were either told that an inert cream would reduce their pain or they were not told this information. Additionally, participants chose between one of two inert creams for the task or they were not given choice. Importantly, we also measured prior experience with cold water immersion. Individuals with prior cold water immersion experience tended to display greater placebo analgesia when given choice, whereas participants without this experience tended to display greater placebo analgesia without choice. Prior stimulus experience appears to moderate the effect of choice on placebo analgesia.

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In a Working Mood?

Journal of Media Psychology Theories Methods and Applications ◽

10.1027/1864-1105.20.1.3 ◽

2008 ◽

Vol 20 (1) ◽

pp. 3-14 ◽

Cited By ~ 17

Author(s):

Leonard Reinecke ◽

Sabine Trepte

Keyword(s):

Cognitive Task ◽

Prior Experience ◽

Computer Game ◽

Control Group ◽

Mood Management ◽

Management Processes ◽

Quasi Experimental ◽

Personal Media ◽

Experimental Group ◽

Subsequent Task

Abstract. This quasi-experimental study examined the effects of exposure to a computer game on arousal and subsequent task performance. After inducing a state of low arousal, participants were assigned to experimental or control conditions via self-selection. Members of the experimental group played a computer game for five minutes; subjects in the control group spent the same amount of time awaiting further instructions. Participants who were exposed to the computer game showed significantly higher levels of arousal and performed significantly better on a subsequent cognitive task. The pattern of results was not influenced by the participants' prior experience with the game. The findings indicate that mood-management processes associated with personal media use at the workplace go beyond the alteration of arousal and affect subsequent cognitive performance.

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