Price

The Baseline Stage consisted of a set of auctions in which no buy prices were offered, while the Treatment Stage was made up of auctions in which buy prices were offered at various levels.

The Baseline Stage consisted of a block of 10 auctions in which no buy prices (NO) were offered.

In considering how often buy prices are utilized by the bidders, there are three related questions: (1) does buy price utilization vary between buy price types, (2) does buy price utilization vary across institutions, and (3) how does buy price utilization vary with buy price level?

First, buy prices are used more frequently as the number of BPE bidders increases in every case except for TEMP/NOPROXY with a buy price of 25.

It is clear in the figure that there is more early bidding in auctions with buy prices, regardless of the type, than those without (note the greater number and taller bars to the left).

In addition to the early bidding evident in auctions with a buy price, there is also a large amount of late bidding that occurs in all auctions, even those without buy prices.

Both the additional early bidding and improved efficiency that may accompany the use of a buy price may be important motivating factors for the introduction of buy prices in online auctions.

First, the introduction of a buy price may be an attempt to increase seller revenue as revenue is higher in auctions with buy prices than in auctions without.

"Buy Prices in Online Auctions: Irrationality on the Internet?" Economics Letters, 72(3), 2001, 325-33.

The introduction of a buy price (whether temporary or permanent) to risk-averse bidders increases revenue for a wide range of buy prices, and when bidders have either CARA or DARA, the optimal introduction of a permanent buy price results in higher revenue than that of a temporary buy price.