Abstract
AbstractThere is disagreement in the auction literature on the question of whether dynamic Buy-It-Now (BIN) prices can increase the efficiency of online auctions. We report results from an experimental study with economically motivated subjects that compares the standard online auction format currently used on eBay with a new auction format (Online Linear Dutch Auction - OLDA) that allows for dynamic BIN prices. We find no statistically significant differences between these two auction formats. We then compare our results with these of another study investigating OOBCA (Online One-time BIN-price Change Auction - another auction format that allows for dynamic BIN prices), which finds that OOBCA outperforms the standard online auction format. OLDA is more dynamic in nature than OOBCA yet OOBCA outperforms a generalized static online auction design in the laboratory while the OLDA does not. We discuss theoretical and practical implications of our findings.KeywordsInternet auction designauction performancebuyout pricedynamic auctionsexperimental economicselectronic markets
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