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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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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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description	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.
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source	International Bibliography of the Social Sciences (IBSS); ScienceDirect Freedom Collection
subjects	Auctions Behavior Behavioural economics Bidders Bidding Bids Electronic commerce Experience Internet Learning Longitudinal studies Studies
title	Bidding behavior and experience in internet auctions
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