Jump Bidding in Online Auctions: An in Vivo Experiment
32 Pages Posted: 25 Nov 2021
One feature of online auctions that has attracted much interest is jump bidding, whereby a bidder raises the price by more than what is needed to become the highest bidder. The effects of jump bidding on the final price remain unclear. Our study involves an in vivo experiment during live auctions on a large online auction platform. We intervened early in auctions at low, non-competitive price levels, either through jump bidding or through incremental bidding, and randomly varied the magnitude of our intervention. We find no effect of jump bidding on the final price. However, we find that smaller jump bids lowered the final price vis-à-vis no intervention or an incremental bid, while larger jump bids increased it. We conjecture that uncertainty about an item's value leads bidders to gauge it from the size of other bidders' jump bids.
Keywords: Jump bidding, Online auction, Field experiment
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