The Effect of Information Asymmetries on Bidder Behavior: An Empirical Analysis of Online Bidding in Heavy Equipment Auctions

Abstract

This study examines an information asymmetry between two groups of buyers participating in heavy equipment auctions - one group bidding online with only limited access to information about the goods for sale, and the other bidding on site, with the ability to inspect the equipment and observe other bidders' behavior. Results suggest that online bidders do not win a disproportionate share of 'lemons' in the auction sales. Online bidders appear to be leveraging the limited amount of information available to them to reduce their risk of suffering from the Winner's Curse.

Keywords: auction, information asymmetry, bidding, lemons, cyberlaw, consumer protection

JEL Classification: D44, D82, D83, D80, D18