Managing Online Auctions: Current Business and Research Issues

Pinker, Edieal J.; Seidmann, Abraham; Vakrat, Yaniv

doi:10.1287/mnsc.49.11.1457.20584

Cited by 275 publications

(175 citation statements)

References 53 publications

(54 reference statements)

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“…Consider the literature on auctions (Klemperer 1999) and their application to electronic commerce (Pinker et al 2002) first. Auction theory is concerned with the efficient allocation of a scarce good.…”

Section: Related Literaturementioning

confidence: 99%

Online Haggling at a Name-Your-Own-Price Retailer: Theory and Application

2005

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We present a formal model of haggling between a name-your-own-price retailer and a set of individual buyers. Rather than posting a price, the retailer waits for potential buyers to submit offers for a given product and then chooses to either accept or reject them. Consumers whose offers have been rejected can invest in additional haggling effort and increment their offers. This pricing model allows the name-your-own-price retailer to engage in price discrimination: As haggling is costly for the potential buyer, customers with a high willingness to haggle will achieve lower transaction prices. However, because haggling is costly, it reduces overall welfare and diminishes the benefits of price discrimination. Our study is motivated by several name-your-own-price retailers that have recently emerged on the Internet. Based on detailed transaction data of a large German name-your-own-price retailer, we present a model of consumer haggling. We then show how this model can be used to improve the decision making of the retailer, who needs to choose a threshold price above which all offers are accepted. Another decision variable for the retailer lies in the user interface design, which allows the retailer to either facilitate or to hinder the haggling of the consumer. AbstractWe present a formal model of haggling between a name-your-own-price retailer and a set of individual buyers. Rather than posting a price, the retailer waits for potential buyers to submit offers for a given product and then chooses to either accept or reject them. Consumers whose offers have been rejected can invest in additional haggling effort and increment their offers. The main advantage of this pricing model is that it allows the name-your-own-price retailer to engage in price discrimination: as haggling is costly for the potential buyer, customers with a high willingness to haggle will achieve lower transaction prices. Thus, haggling effort can be used as a self-selection mechanism to implement price discrimination. Our study is motivated by several name-your-own-price retailers that have recently emerged on the Internet. Based on detailed transaction data of a large German name-yourown-price retailer, we present a model of consumer haggling. We then show how this model can be used to improve the decision making of the retailer, who needs to choose a threshold price above which all offers are accepted. Another decision variable for the retailer lies in the user interface design, which allows the retailer to either facilitate or to hinder the haggling of the consumer.

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Section: Related Literaturementioning

confidence: 99%

Online Haggling at a Name-Your-Own-Price Retailer: Theory and Application

2005

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“…An enormous literature evinces the innumerable variations of those games, including some empirical tests of theory (Laffont 1997). Certainly, the advancement of technology (particularly Internet technology) and websites such as eBay has helped spawn the enormous recent interest in consumer (see, e.g., Pinker et al 2003) and industrial (see, e.g., Kauffman and Popkowski Leszczyc 2005) auction games.…”

Section: An Example-auction Gamesmentioning

confidence: 99%

Marketing and Designing Transaction Games

Shugan

2005

Marketing Science

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Past research reveals an extraordinary number and variety of transaction games, often with different rules. For example, buy and sell offers can be take-it-or-leave-it, irrevocable, of limited duration, negotiable, contingent on events, et cetera. The possible sets of rules seem endless. Past (often, very insightful) research has focused on optimization, given particular rules of the game. This focus often overlooks why players choose to play the game. Indeed, assuming that an exchange will occur makes the marketing function (e.g., facilitating exchanges) inconsequential. Unlike inescapable market games between rival firms, buyers and sellers often choose whether to play transaction games. Hence, game design (i.e., setting the rules of the game) becomes vital, because the design determines both the likelihood of desirable outcomes (e.g., the best transaction price) and whether (or how many) players will choose to play. We need more research revealing the desirability of various rule sets for different target groups and revealing rules that enhance the benefits to all players. For example, a particular auction game might provide sellers with liquidity (i.e., faster transactions) while providing buyers with unique items at bargain prices. We should also explore the interaction of rules and player benefits (e.g., liquidity, anonymity, likelihood of a transaction, etc.).transaction games, game theory, auctions, rules of the game, game design, player benefits

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“…1,2 As the online transactions are becoming a part of our everyday life, however, a large number of online frauds have been reported. 3 Frauds occur often due to the high degree of anonymity in transactions or features that allow users to have multiple accounts in a platform or creating them are easy (e.g., Pinker et al 2003, Trevathan and Read 2006, Chua and Wareham 2002, Kwan et al 2010. Online frauds can also be a consequence of low costs of entry and exit: users with opportunistic intentions can come back to marketplaces under different identities after cheating on their customers.…”

Section: Introductionmentioning

confidence: 99%

Endogenous Reputation Formation: Cooperation and Identity Under the Shadow of the Future

Kamei

2015

SSRN Journal

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Abstract:People are interacting more with strangers thanks to recent technological advancement in online platforms. Online interactions can be characterized by infinitely-repeated games. Recent studies have shown that institutions that make people's decisions open to others may enhance cooperation in these situations. But it is still unknown whether people can successfully cooperate with each other by choosing to show their identities and building good reputation when there is an option to hide them. We deal with this question using an experimental laboratory. Our experiment shows that a non-negligible fraction of people conceal their identities and people fail to cooperate with each other if hiding identities is free. However, almost all show their identities and successfully achieve cooperation with their partners if a small explicit cost is charged for act of hiding.JEL classification: C73, C92, D70, M21

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Managing Online Auctions: Current Business and Research Issues

Cited by 275 publications

References 53 publications

Online Haggling at a Name-Your-Own-Price Retailer: Theory and Application

Online Haggling at a Name-Your-Own-Price Retailer: Theory and Application

Marketing and Designing Transaction Games

Endogenous Reputation Formation: Cooperation and Identity Under the Shadow of the Future

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