Reference price effect and its implications for decision making in online auctions: An empirical study

Reference price effect and its implications for decision making in online auctions: An empirical study

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Article ID: iaor20127358
Volume: 54
Issue: 1
Start Page Number: 381
End Page Number: 389
Publication Date: Dec 2012
Journal: Decision Support Systems
Authors:
Keywords: supply & supply chains
Abstract:

Simultaneous supplies of an item by multiple online auction vendors greatly reduce the burden of arduous search that a consumer has to conduct in a brick‐and‐mortar market. The enriched information set endows all auction participants with added decision flexibility and complexity. One of such flexibilities or complications is the potential of information cross‐referencing. In this study, we empirically tested if and how bidders interacted with each other through cross‐referencing. Our results strongly supported the existence of cross‐referencing. We also identified new strategies and tactical moves as best responses for sellers and bidders under the online simultaneous condition. This research provided another support for the path‐dependent nature of online auctions as bidders were found to actively adjust their behavior in avoidance of winner's curse.

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