Search and Choice in Online Consumer Auctions

38 Pages Posted: 3 Aug 2010 Last revised: 19 Jun 2014

See all articles by Ernan Haruvy

Ernan Haruvy

University of Texas at Dallas - Naveen Jindal School of Management

Peter T. L. Popkowski Leszczyc

University of Queensland - Business School

Date Written: July 3, 2010

Abstract

Price dispersion in simultaneous online auctions is a puzzle in light of the relatively low search costs required to find the lower price. Much of this price dispersion appears to be due to lack of switching by bidders between auctions, which in turn could be due to inertia related to search costs. We identify some of the influencing factors through a controlled field experiment involving pairs of simultaneous auctions. Keeping the sellers and the goods sold identical between two auctions, we vary auction design features between and within pairs including shipping cost, open reserve, secret reserve price and duration and provide bidders with incentives to search. We use a choice model which examines individual choice between pairs of simultaneous auctions. We find that within-pair price dispersion is substantial and that prices and auction choice by bidders are indeed related to search costs. We find strong inertia in auction choice and find that this effect significantly interacts with time left in the auction. While individuals do not always choose a lower priced auction, they are more likely to do so when search costs are low or search incentives are high.

Keywords: Experimental Economics, Auctions, Field Experiments. Search

JEL Classification: C93, D12, D44, D83, M30, M39

Suggested Citation

Haruvy, Ernan and Popkowski Leszczyc, Peter T. L., Search and Choice in Online Consumer Auctions (July 3, 2010). Marketing Science 29(6):1152-1164 (2010); University of Alberta School of Business Research Paper No. 2013-1115. Available at SSRN: https://ssrn.com/abstract=1653085

Ernan Haruvy (Contact Author)

University of Texas at Dallas - Naveen Jindal School of Management ( email )

P.O. Box 830688
Richardson, TX 75083-0688
United States

Peter T. L. Popkowski Leszczyc

University of Queensland - Business School ( email )

Brisbane, Queensland 4072
Australia

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