Repeat Bidding on Internet-Based Multiple-Item “Name-Your-Own-Price” Auctions

Abstract

Name-your-own-price (NYOP) auctions have gained recent popularity on the Internet. In many NYOP settings, the auction firm displays multiple bidding items for the bidders (such as multiple options of airline tickets) and restricts them to place a single offer. Recent studies have, however, shown that the Internet environment enables many customers to engage in repeat bidding. Our purpose in this paper is: (1) to analyze the consumer value gained by repeat bidding on multiple-item NYOP auctions under different-bidding strategies; (2) to derive an upper bound on the value gained by repeat bidding when multiple items are present; and (3) to analyze the multiple-item NYOP auction from a consumer-firm perspective. We use Monte Carlo simulation to discuss the effects of various auction parameters on the firm's expected profit, and show that the presence of multiple bidding items provides a win-win situation for both the auction firm and the bidders. In particular, we show that multiple items increase the expected value for the consumers and also help firms mitigate potential losses due to repeat bidding.