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Hard and Soft Closes: A Field Experiment on Auction Closing Rules

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Abstract

Late bidding in online auctions has attracted substantial theoretical and empirical attention. This paper reports the results of a controlled field experiment on late bidding behavior. Pairs of $50 gift certificates were auctioned simultaneously on Yahoo! Auctions, using a randomized paired comparison design. Yahoo? site allows sellers to specify whether they wish to use a hard or soft close, and this enabled us to run one auction in each pair with a soft close, and the other with a hard close. An advantage to our randomized paired design is that differences in numbers of bidders, numbers of simultaneously occurring auctions and other sources of noise in bidding behavior are substantially controlled when drawing inferences with respect to treatment effects. We find that auctions with soft-closes yield economically and statistically significantly higher mean seller revenue than hard-close auctions, and that the difference is due to those cases where the soft-close auction is extended.

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  • DOI: 10.1007/0-387-24243-0_6
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References

  • Ariely, Dan, Ockenfels, Axel, and Roth, Alvin. (December 2002). “An Experimental Analysis of Ending Rules on Internet Auctions,” mimeo, Harvard University.

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  • Roth, Alvin and Ockenfels, Axel. (2000). “Last Minute Bidding and the Rules for Ending Second-Price Auctions: Theory and Evidence from a Natural Experiment on the Internet.” National Bureau of Economic Research Working paper No. 7729.

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  • Roth, Alvin and Ockenfels, Axel. (Month 2001). “Last Minute Bidding and the Rules for Ending Second-Price Auctions: Evidence from eBay and Amazon Auctions on the Internet.” American Economic Review, volume, 1341–78.

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© 2005 Springer

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Houser, D., Wooders, J. (2005). Hard and Soft Closes: A Field Experiment on Auction Closing Rules. In: Rapoport, A., Zwick, R. (eds) Experimental Business Research. Springer, Boston, MA. https://doi.org/10.1007/0-387-24243-0_6

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