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The impact of buy-now features in pay-per-bid auctions

Reiner, Jochen; Natter, Martin; Skiera, Bernd (2014). The impact of buy-now features in pay-per-bid auctions. Journal of Management Information Systems, 31(2):77-104.

Abstract

Pay-per-bid auctions require all bidders to pay for every bid. However, paying bidding fees without receiving the auction item in return often causes high dissatisfaction among losers, resulting in heated discussions and high churn rates. To reduce these negative reactions, pay-per-bid auctioneers created the Buy-Now feature, which allows losers to put all or part of the bidding fees that they paid during an auction toward buying the auction item. Using unique data, including individual customer bidding histories and cost data from more than 6,800 pay-per-bid auctions, we find that, overall, the Buy-Now feature leads to more aggressive bidding behavior, attracts more bidders, increases loyalty, and results in a higher profit per auction. However, for voucher auctions that represent common value auctions, the Buy-Now feature causes a decrease in the number of bidders and the profit per auction, although we find an increase in the average number of bids per bidder. We also show theoretically that a bidder can pursue a risk-free bidding strategy. However, we find empirically that bidders rarely use this strategy.

Additional indexing

Item Type:Journal Article, refereed, original work
Communities & Collections:03 Faculty of Economics > Department of Business Administration
Dewey Decimal Classification:330 Economics
Scopus Subject Areas:Social Sciences & Humanities > Management Information Systems
Physical Sciences > Computer Science Applications
Social Sciences & Humanities > Management Science and Operations Research
Social Sciences & Humanities > Information Systems and Management
Uncontrolled Keywords:Management Science and Operations Research, Information Systems and Management, Management Information Systems, Computer Science Applications
Scope:Discipline-based scholarship (basic research)
Language:English
Date:2014
Deposited On:09 Dec 2016 11:28
Last Modified:14 Feb 2025 02:38
Publisher:Taylor & Francis
ISSN:0742-1222
OA Status:Closed
Publisher DOI:https://doi.org/10.2753/MIS0742-1222310204
Other Identification Number:merlin-id:14184
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