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Reactivity based model to study online auctions dynamics

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Abstract

Online auctions have challenged many assumptions and results from the traditional economic auction theory. Observed bidder behavior in online auctions often deviates from equilibrium strategies postulated by economic theory. In this research, we consider an online auction as an information system that provides a long-duration, information-rich, dynamic application environment in which users (bidders) interact with the system in a feedback loop, in what we term reactivity. Bidders react to the observed conditions of the auction and events triggered by actions of other bidders. In this work we propose a new characterization model with the purpose of isolating the segments of the auction in which users react to the auction conditions and events. Through this model, it is possible to enrich the auction characterization. Despite the existence of other bidding characterization models, none of them is enough for understanding the factors that characterize and explain the auction dynamics. We present results which demonstrate the advantages of applying our methodology. The final objective is to gain an understanding of what drives the dynamics of online auctions, the role of reactivity in the auction dynamics, and how the outcome of the auction is affected by the particular dynamics of the system.

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Notes

  1. There may be better algorithms for determine the desired clusters, but we leave the investigation of the best algorithm as a future work direction.

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Acknowledgments

We wish to thank Yanbin Tu for essential help in providing us with the eBay dataset. We also acknowledge CIDRIS—Center for Internet Data Research and Intelligence Services for the infrastructure support, CNPq, and FINEP.

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Authors and Affiliations

  1. Department of Computer Science, Federal University of Minas Gerais, Belo Horizonte, MG, Brazil

    Adriano Pereira, Leonardo Rocha, Fernando Mourão & Wagner Meira Jr.

  2. School of Business, University of Connecticut, Storrs, CT, USA

    Paulo Góes

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  1. Adriano Pereira
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  2. Leonardo Rocha
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  4. Paulo Góes
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  5. Wagner Meira Jr.
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Correspondence to Adriano Pereira.

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Pereira, A., Rocha, L., Mourão, F. et al. Reactivity based model to study online auctions dynamics. Inf Technol Manag 10, 21–37 (2009). https://doi.org/10.1007/s10799-008-0044-z

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