Saturday, April 27, 2019

Sniping in soft-close auctions (right before the time that triggers an extension)

From Marketing Letters:

Marketing Letters
pp 1–13Cite as
  • Wen Cao, 
  • Qinyang Sha, 
  • Zhiyong Yao, 
  • Dingwei Gu, 
  • Xiang Shao
Abstract: The existing studies suggest that sniping is an equilibrium strategy in hard-close online auctions, but not in soft-close ones. In this paper, we use a unique, large-scale data set from soft-close Overstock and hard-close eBay to document sniping phenomena under the two different closing rules. Estimation results show that sniping is prominent on both websites, but they are prevalent at different times. On eBay, sniping occurs right before the auction close, while on Overstock sniping happens predominantly in a short window of time before the triggering period, during which any additional high bid automatically extends the online auction. Furthermore, the revenue effect of sniping is significantly stronger on Overstock than on eBay.

No comments: