Article ID: | iaor20113137 |
Volume: | 51 |
Issue: | 1 |
Start Page Number: | 31 |
End Page Number: | 41 |
Publication Date: | Apr 2011 |
Journal: | Decision Support Systems |
Authors: | Wallenius Jyrki, Wallenius Hannele, Puro Lauri, Teich Jeffrey E |
We define and identify bidding strategies in real‐life small loan auctions (Prosper.com). In such auctions, lenders bid for borrowers' loan listings and the winners get to fund the loan at an interest rate determined by the auction. The exceptionally large empirical database provided by Prosper.com offers a unique opportunity to test and further develop the theory of online auctions. This study shows that bidding behavior is not homogeneous among bidders, as the traditional auction theory suggests. Instead, bidders use many different bidding strategies. Moreover, learning and bidders' consistency over time in different auctions is studied.