Abstract
Reserve price auctions are one of hot research topics in the traditional auction theory. Here we study the starting price in an online auction, counterpart of the public reserve price in a traditional auction. By considering three features of online auctions, the stochastic entry of bidders (subject to Poisson process), the insertion fee proportional to the starting price, and time discount, we have analyzed the properties of extremum points of the starting price for maximizing seller’s expected revenue, and found that, under certain conditions, the optimal starting price should be at the lowest allowable level, which is contrary to results from the classic auction theory and finds its optimality in reality. We have also developed a general extended model of multistage auction and carried out analysis on its properties. At last, some directions for further research are also put forward.
Supported by NSFC and SRG: 7001719 of City University of Hong Kong.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Preview
Unable to display preview. Download preview PDF.
References
Bajari, P., Hortacsu, A.: The Winner’s Curse, Reserve Prices and Endogenous Entry: Empirical Insights from eBay Auctions. Rand J. Econom. 3, 329–355 (2003)
Greenleaf, E.A., Rao, A.G., Sinha, A.R.: Guarantees in Auctions: The Auction House as Negotiator and Managerial Decision Maker. Management Sci. 39, 1130–1145 (1993)
Heid, J., Malina, T.: Sell It on eBay: TechTV’s Guide to Successful Online Auctions. Peachpit Press, Berkeley (2004)
Kauffman, R.J., Wood, C.A.: Running up the Bid: an Empirical Study of Seller Behavior in Internet Auctions. In: Proceedings of the 2000 Americas Conference on Information System, Long Beach, CA, pp. 929–935 (2000)
Krishna, V.: Auction Theory. Academic Press, San Diego (2002)
Levin, D., Ozdenoren, E.: Auctions with Uncertain Numbers of Bidders. J. Econom. Theory. 118, 229–251 (2004)
Lucking-Reiley, D.: Acutions on the Internet: What’s Being Auctioned and How? J. Indust. Econom. 48, 227–252 (2000)
Lucking-Reiley, D., Bryan, D., Prasad, N., Reeves, D.: Pennies from eBay: the Determinants of Price in Online Auctions. Working Paper (2000)
Myerson, R.: Optimal Auction Design. Mathematics of Ope. Res. 6, 58–73 (1981)
Pinker, E.J., Seidmann, A., Vakrat, Y.: Managing Online Auctions: Current Business and Research Issues. Management Sci. 49, 1457–1484 (2003)
Riley, J.G., Samuelson, W.F.: Optimal Auctions. Amer. Econom. Rev. 71, 381–392 (1981)
Yu, H., Wang, S.Y., Dang, C.Y.: A Case Study of Online Auctions in eBay-eachnet: Dimension, Characters and Performance. In: Competitive Bidding and Auctions II, pp. 126–151. Global-Link Publisher, Hong Kong (2005)
Author information
Authors and Affiliations
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2005 Springer-Verlag Berlin Heidelberg
About this paper
Cite this paper
Yu, H., Wang, S., Dang, C. (2005). Optimal Starting Price in Online Auctions. In: Deng, X., Ye, Y. (eds) Internet and Network Economics. WINE 2005. Lecture Notes in Computer Science, vol 3828. Springer, Berlin, Heidelberg. https://doi.org/10.1007/11600930_31
Download citation
DOI: https://doi.org/10.1007/11600930_31
Publisher Name: Springer, Berlin, Heidelberg
Print ISBN: 978-3-540-30900-0
Online ISBN: 978-3-540-32293-1
eBook Packages: Computer ScienceComputer Science (R0)