To Discount or Not to Discount: An Assessment of Perceptions, Beliefs, and Intentions to Use Electronic Auctions with Discounts

Abstract

In the digital economy, electronic auction systems are becoming more prevalent in facilitating the transactions between buyers and sellers. Auction websites, such as eBay and Amazon, as well as more sophisticated platforms, such as Moai and FrictionlessCommerce have increased transaction volume by offering tailored auction protocols to specific customer groups. meet2trade is a generic electronic market platform that supports various auction mechanisms. This study examines the impact of a discount in a second-price, sealed-bid mechanism on bidding behavior and market outcomes. Emphasis is thereby placed on bidders’ system-based perceptions, beliefs about usage and institutional-based trust, and intention to use such an auction. Ninety students were recruited to participate in an experiment held at a Western European university. The experiment observed user behavior in second-price auctions with and without a discount. The results demonstrate that although discounts do affect bidding behavior and economic outcomes, they do not influence bidder’s intentions to use such auction mechanisms. Instead, we found that intention to use is influenced by institutional and usage beliefs that are shaped by system-based perceptions, which in turn provide specific advice to market engineers on the technical aspects influencing system adoption.