Internet Auctions

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Ariely et al. (890 - 907) compare the timing of bids in eBay and Amazon second-price online auctions .It an experiment designed to determine the effects of auction closing rules on biding behavior. Two bidding companies are investigated: eBay and Amazon. The difference between the two is that at eBay, strict auctions have a fixed deadline and all bids end at a predefined time while at Amazon the deadlines are extended if need be past the deadline. They observe that that late bids fail to be transmitted to the auction owing to internet congestion.

The samples were taken from both companies under investigation and randomly matched. It was then analyzed mathematically and represented graphically. It was noted that at eBay which offered strict scheduled deadline, recoded a bigger number of late bidders compared to Amazon which extend its deadlines. The risks occurred from late bids can be attributed to bid lost and zero response from the internet auctions at eBay while at the Amazon the risk is reduced as a result of extension of the deadline.

In conclusion, they note that an early bidder who submits a high amount than any other one during the auction wins the auction and finally ends up paying the minimum increment which is more than the second highest submitted bid. There are more late bids in the fixed deadlines than the automatic extensions at eBay and Amazon respectively. The result shows that under controlled conditions, the difference in ending rules between the two auction houses cause the patterns of behavior. The results agrees with the general patterns in the auction houses and therefore explain their hypothesis that fixed deadlines are more likely to have a big number of late bids than the extended deadlines. The experiment demonstrates enough conditions for late biddings but not all factors that take place in internet bidding.

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