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Sniping and Squatting in Auction Markets

Sniping and Squatting in Auction Markets Abstract We conducted a field experiment to test the benefit from late bidding (sniping) in online auction markets. We compared sniping to early bidding (squatting) in auctions for newly-released DVDs on eBay. Sniping led to a statistically significant increase in our average surplus. However, this improvement was small. The two bidding strategies resulted in a variety of other qualitative differences in the outcomes of auctions. We show that a model of multiple concurrent auctions, in which our opponents are naïve or incremental bidders as identified in the lab, explain the results well. Our findings illustrate how the overall impact of naïveté, and the benefit from sniping observed in the lab, may be substantially attenuated in real-world market settings. (JEL D44 ) http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png American Economic Journal: Microeconomics American Economic Association

Sniping and Squatting in Auction Markets

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References (11)

Publisher
American Economic Association
Copyright
Copyright © 2009 by the American Economic Association
Subject
Articles
ISSN
1945-7685
eISSN
1945-7685
DOI
10.1257/mic.1.2.68
Publisher site
See Article on Publisher Site

Abstract

Abstract We conducted a field experiment to test the benefit from late bidding (sniping) in online auction markets. We compared sniping to early bidding (squatting) in auctions for newly-released DVDs on eBay. Sniping led to a statistically significant increase in our average surplus. However, this improvement was small. The two bidding strategies resulted in a variety of other qualitative differences in the outcomes of auctions. We show that a model of multiple concurrent auctions, in which our opponents are naïve or incremental bidders as identified in the lab, explain the results well. Our findings illustrate how the overall impact of naïveté, and the benefit from sniping observed in the lab, may be substantially attenuated in real-world market settings. (JEL D44 )

Journal

American Economic Journal: MicroeconomicsAmerican Economic Association

Published: Aug 1, 2009

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