Understanding Preferences for Bidding or Buying
42 Pages Posted: 16 Nov 2021 Last revised: 28 Jan 2022
Abstract
This paper analyzes consumers' choices between, as well as behavior within three selling mechanisms which are frequently used in online marketplaces: posted prices, ascending auctions and Buy-It-Now auctions. In an exploratory experiment, where subjects choose between one mechanism and an alternative mechanism, we find that subjects use a cut-off strategy based on values and prices in their choices. While we do not find a systematic effect of behavioral factors, we do find strong evidence for the existence of gender differences: females are more likely to choose a mechanism involving buying, and also seem to use a more explicit cut-off strategy.
Keywords: Consumer preferences, Posted price, Ascending auction, Buy-It-Now auction, Experiment
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