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The impact of jump bidding in online auctions

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Abstract

This paper reports findings of two field studies, conducted on a local online auction website, that compare bidding strategies in charity and non-charity auctions, focusing on the extent of jump bidding at different stages of auctions. Results indicate that jump bidding is negatively correlated with bidder entry and positively associated with ending prices. These correlations are greatest during the beginning stage of auctions and are substantially larger for charity auctions than for non-charity auctions. Additionally, early-stage jump bidding occurred more often in charity auctions (consistent with bidders trying to drive up prices in charity auctions), ending-stage jump bidding was more frequent in non-charity auctions (possibly used strategically to win the auction). Further, frivolous products tended to sell at a higher proportion of retail value in charity auctions, providing a replication of the results of previous researchers but in a field setting.

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Notes

  1. Bidders may also bid for more selfish reasons, such as to signal their generosity, in accordance with, e.g., the see-and-be-seen model (Isaac and Schnier 2005; Popkowski Leszczyc and Rothkopf 2010).

  2. A square root transformation provides an approximation for the Poisson distribution (Thacker and Bromiley 2009).

  3. For study 2 we added a product-specific intercept to control for heterogeneity in the value across products.

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Authors and Affiliations

  1. Department of Marketing, Faculty of Business and Economics, Monash University, Caulfield Campus, 900 Dandenong Road, Caulfield East, Victoria, 3145, Australia

    Yongfu He

  2. Department of Marketing, Business Economics and Law, University of Alberta, Edmonton, Alberta, Canada, T6G 2R6

    Peter T. L. Popkowski Leszczyc

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  1. Yongfu He
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  2. Peter T. L. Popkowski Leszczyc
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Correspondence to Peter T. L. Popkowski Leszczyc.

Additional information

This research was supported by a grant from the Social Sciences and Humanities Research Council of Canada and the University of Alberta GRA Rice Faculty Fellowship. The authors thank Sandy Jap, Yu Ma, and Paul Messinger; Thomas Spalding; and seminar participants at the University of Alberta and the Marketing Science conference for helpful comments and suggestions.

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He, Y., Popkowski Leszczyc, P.T.L. The impact of jump bidding in online auctions. Mark Lett 24, 387–397 (2013). https://doi.org/10.1007/s11002-013-9228-3

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