Behavioral outcomes from online auctions: reserve price, reserve disclosure, and initial bidding influences in the decision process

Abstract

This study presents a conceptual model of the online auction consumer decision process and empirically tests some of the model relationships by using an experimental design. The factorial design used a combination of reserve price, reserve disclosure, and initial bidding as treatments to impact two behavioral outcome variables: final price sold and auction interest. The data were gathered via a real existing online auction site where products were auctioned, recreating a true market-based environment. The key finding is that having a $1 reserve price that is disclosed is the optimal strategy to adopt when selling goods in an online auction, if the goal of the seller is to maximize sale price and auction interest. The findings of this research provide insight into how and to what degree these factors influence the dependent variables, ultimately providing online auction hosts and sellers with possible methods for maximizing their potential income from online auctions. This research contributes in synthesizing the developed theories underlying traditional “in person” auctions, with the emerging and rapidly growing medium of online auctions.