Does Higher Transparency Lead to More Search in Online Auctions?

Abstract

In a controlled field experiment, we examine pairs of auctions for identical items under different conditions. We find that auction design features that are under the control of the auctioneer - including information transparency, number of simultaneous auctions, and the degree of overlap between simultaneous auctions - affect bidder search and choice. Clickstream data show that a significant relationship between information transparency and price dispersion can be linked to search. Specifically, the effect of information transparency on price dispersion is fully mediated by lookup behavior. Combining these findings, we make auction design recommendations regarding the provision of product and value information.

Keywords: Auctions, field experiments, search, clickstream data

JEL Classification: C93, D12, D44, D83, M30, M34