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Doing their bidding: An empirical examination of factors that affect a buyer’s utility in Internet auctions

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Abstract

What factors make individual bidders pay more or less for the same item in online auctions? We use data on over 55,000 bids over a three-year period collected by a customized Internet software agent. These data are used to perform a within-bidders quasi-experiment, testing bidders who bid on the exact same item at different times during a 30-day period in online auctions. With theories from information systems and consumer behavior as our theoretical lens, we then examine factors that make individuals pay more for the exact same item in online auctions. We find that the same individual will tend to pay more for items sold on a weekend, for items with a picture, and for items sold by experienced sellers. We also find that the same individual is willing to pay more for the same item if others express an interest in that item, exhibiting a type of herd effect. Our results are generalizable to other auctions, and shed light on electronic commerce sales in general, where firms try to sell products for the highest possible price.

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Authors and Affiliations

  1. MIS Research Center and Professor and Chair, Information and Decision Sciences, Carlson School of Management, University of Minnesota, USA

    Robert J. Kauffman (Director)

  2. Mendoza School of Business, University of Notre Dame, Notre Dame

    Charles A. Wood (Assistant Professor of Management)

Authors
  1. Robert J. Kauffman
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  2. Charles A. Wood
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Correspondence to Robert J. Kauffman.

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Kauffman, R.J., Wood, C.A. Doing their bidding: An empirical examination of factors that affect a buyer’s utility in Internet auctions. Inf Technol Manage 7, 171–190 (2006). https://doi.org/10.1007/s10799-006-9181-4

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  • DOI: https://doi.org/10.1007/s10799-006-9181-4

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