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

Posted: 25 Sep 2008

See all articles by Corey M. Angst

Corey M. Angst

IT, Analytics, and Operations department

Ritu Agarwal

University of Maryland - Robert H. Smith School of Business

Jason N. Kuruzovich

Rensselaer Polytechnic Institute (RPI) - Lally School of Management & Technology

Date Written: February 29, 2008

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

Suggested Citation

Angst, Corey M. and Agarwal, Ritu and Kuruzovich, Jason N., Bid or Buy? Individual Shopping Traits as Predictors of Strategic Exit in Online Auctions (February 29, 2008). Available at SSRN: https://ssrn.com/abstract=1273168

Corey M. Angst (Contact Author)

IT, Analytics, and Operations department ( email )

348 Mendoza College of Business
University of Notre Dame
Notre Dame, IN 46556-5646
United States

Ritu Agarwal

University of Maryland - Robert H. Smith School of Business ( email )

College Park, MD 20742-1815
United States

Jason N. Kuruzovich

Rensselaer Polytechnic Institute (RPI) - Lally School of Management & Technology ( email )

110 8th St
Troy, NY 12180
United States

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