Bid Takers or Market Makers? The Effect of Auctioneers on Auction Outcomes

40 Pages Posted: 13 Dec 2013 Last revised: 30 Sep 2014

See all articles by Nicola Lacetera

Nicola Lacetera

University of Toronto - Strategic Management; University of Toronto at Mississauga - Department of Management; National Bureau of Economic Research (NBER)

Bradley Larsen

Stanford University - Department of Economics; National Bureau of Economic Research (NBER); eBay Research Labs

Devin G. Pope

University of Chicago - Booth School of Business

Justin R. Sydnor

University of Wisconsin - Madison

Date Written: December 2013

Abstract

A large body of research has explored the importance of auction design and information structure for auction outcomes. Much less work has considered the importance of the auction process. For example, in many auctions, auctioneers are present and can impact the process of the auction by varying starting prices, level of price adjustments, the speed of the auction, the way they interact with auction participants, or their characteristic chant that is intended to excite buyers. We explore the importance of auction process by testing whether auctioneers can have a systematic difference on auction outcomes. We analyze more than 850,000 wholesale used car auctions and find large and significant differences in outcomes (probability of sale, price, and auction speed) across auctioneers. The performance heterogeneities are stable across time and correlate with subjective evaluations of auctioneers provided by the auction house. Although the available data here do not allow us to conclusively isolate mechanisms, a range of evidence suggests a role for tactics that generate excitement among bidders. Overall, these findings illustrate the complexities of auction environments and how outcomes can be impacted by subtle changes in process.

Suggested Citation

Lacetera, Nicola and Larsen, Bradley and Pope, Devin G. and Sydnor, Justin R., Bid Takers or Market Makers? The Effect of Auctioneers on Auction Outcomes (December 2013). NBER Working Paper No. w19731. Available at SSRN: https://ssrn.com/abstract=2367141

Nicola Lacetera (Contact Author)

University of Toronto - Strategic Management ( email )

Canada

University of Toronto at Mississauga - Department of Management

Canada

National Bureau of Economic Research (NBER) ( email )

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Cambridge, MA 02138
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Bradley Larsen

Stanford University - Department of Economics ( email )

Landau Economics Building
579 Serra Mall
Stanford, CA 94305-6072
United States

HOME PAGE: http://www.stanford.edu/~bjlarsen/research.html

National Bureau of Economic Research (NBER) ( email )

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eBay Research Labs ( email )

2065 Hamilton Avenue
San Jose, CA
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Devin G. Pope

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

Justin R. Sydnor

University of Wisconsin - Madison ( email )

716 Langdon Street
Madison, WI 53706-1481
United States

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