Bid or Buy? Individual Shopping Traits as Predictors of Strategic Exit in Online Auctions

Abstract:     
Technology has engendered some fundamental transformations in processes related to buying and selling goods. A compelling example of this transformation is online auctions, which have become increasingly popular platforms for conducting commerce. While online auctions have been researched extensively utilizing economic theories, less attention has been paid to the behavioral aspects of bidder conduct. Drawing upon the consumer behavior and auctions literature, this paper examines individual trait differences in shopping preferences which predict a buyer's decision to use the "Buy-it-Now" (BIN) functionality in online auctions, i.e., the drivers of "strategic exit." We utilize the term strategic exit to describe the situation in which bidders strategically choose to utilize a fixed price BIN option. We argue that impulse buying tendencies, trait competitiveness, and hedonic need fulfillment are antecedents of strategic exit, and suggest that hedonic need fulfillment moderates the effects of impulse buying tendencies on strategic exit. We also propose that the decision to exit an online auction early by using the BIN feature results in the buyer paying a higher than average price. Actual price data collected from 113 online auctions are combined with surveys of participants to examine the effects of behavioral characteristics on buyers' choice of the BIN strategy over competing. Theoretical and practical implications for the design of electronic auctions as well as for the process of selling goods are offered.

Keywords: Shopping traits, behavioral predictors, auctions, online auctions, strategic exit, Buy-it-Now, impulse buying, trait competitiveness, hedonic need, product knowledge

working papers series