Market Information and Bidder Heterogeneity in Secondary Market Online B2B Auctions

Online auction environments provide several sources of information that can be used by bidders to form their bids. The impact of this information on bidding is likely to be higher when ambiguously specified products are auctioned. The secondary market represents one such environment, where used and returned items from big‐box retailers are auctioned off to other business buyers. Using a proprietary data set of secondary market auctions hosted on an online business‐to‐business platform, we study how market pricing information from other auctions for comparable products affects the bidding behavior of the first bidder. First bidders are shown to be influenced by two sets of pricing information: prices from their own historical bidding behavior and concurrent prices, formed from other open and just‐finished auctions relative to the focal auction. We also study how the impact of this market pricing information is moderated by bidder heterogeneity, captured by bidder experience and cross‐bidding activity on the platform across comparable concurrent auctions. Finally, we show that the first bid is significantly associated with the auction’s final price, contingent on the type of first bidder. Auctions are increasingly being used for the sale of ill‐defined and idiosyncratic products; our work thus provides managerial implications for how auctioneers may design and manage the flow of relevant information to different classes of bidders on their sites in order to enhance their yields. This paper was accepted by Lorin Hitt, information systems.