Bidding behavior and experience in internet auctions

We study the role of experience in internet art auctions by analyzing repeated bidding by the same bidder in a unique longitudinal field dataset. Our results show that experience significantly lowers the level of bids suggesting that bidders change their bidding behavior throughout time. Participati...

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Bibliographic Details
Published in:European economic review 2013-07, Vol.61, p.14-27
Main Authors: Pownall, Rachel A.J., Wolk, Leonard
Format: Article
Language:English
Subjects:
Auctions
Behavior
Behavioural economics
Bidders
Bidding
Bids
Electronic commerce
Experience
Internet
Learning
Longitudinal studies
Studies
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Summary:We study the role of experience in internet art auctions by analyzing repeated bidding by the same bidder in a unique longitudinal field dataset. Our results show that experience significantly lowers the level of bids suggesting that bidders change their bidding behavior throughout time. Participating in more than ten auctions brings down average bids by up to 26%. We further test several possible explanations for the observed learning behavior and show that the change in bidding strategy is a result of a change in within-auction behavior that is generated with experience. Our results are robust to concerns of endogenous participation as well as bidder fixed effects. ► Analyze repeated bidding in a unique longitudinal field dataset. ► Bidders reduce bids significantly over time. ► The timing of bids drives the bid reduction.
ISSN:0014-2921
1873-572X
DOI:10.1016/j.euroecorev.2013.02.007