Posted price offers in internet auction markets (Q2507987): Difference between revisions

The book contains a study of a model describing an auction with a posted price offer (APPO). The idea of the investigation comes from internet auctions. Several internet marketplaces have recently extended the flexibility of their selling mechanisms by creating hybrid institutions which combine an auction with a fixed price offer so that buyers can choose to bid in the auction or to acquire the item for the fixed price. The analysis presented in the book can be rated among the studies applying the so called market engineering approach. The APPO model is investigated here both theoretically and by a laboratory experiment. The book opens with an introduction giving a general background to the APPO analysis and the explanation of the main ideas. Chapter 2 presents the theoretical part of the considerations. An APPO is considered as a Bayesian game and solved by equilibrium analysis. The model is based on the symmetric independent private values assumptions. In order to analyze the APPO institution, the concept of a bidder's acceptance threshold, which yields the maximum posted price offer (PPO) the bidder is willing to accept, is introduced. The respective equilibrium strategies of both the sellers and the bidders are discussed. The main results are as follows: If the bidders are risk-neutral or risk loving, the seller cannot gain from offering an additional PPO when conducting an auction. If the bidders are risk averse, the seller can set PPO such that the expected revenues exceed those of a pure auction. Chapter 2 ends with the overview of similar models discussed in literature [for example: \textit{Eric B. Budish} and \textit{Lisa N. Takeyama}, Econ. Lett. 72, No. 3, 325--333 (2001; Zbl 0988.91023); \textit{Zoltán Hidvégi, Wenli Wang} and \textit{Andrew B. Whinston}, J. Econ. Theory 129, No. 1, 31--56 (2006; Zbl 1132.91445); \textit{Timothy Mathews} and \textit{Brett Katzman}, Econ. Theory 27, No. 3, 597--613 (2006; Zbl 1108.91028)]. The empirical part of the study, investigating actual bidder and seller behavior, is described in Chapters 3 and 4. The experiments were conducted for APPO with three and five bidders. This part of study gives some additional findings that cannot be explained by the model. The results of the experiment depend on the number of bidders. The general conclusion following from this part of investigation is that the effectiveness of the PPO in increasing the seller's expected revenue can be questioned. Chapter 5 summarizes the results. The main needed mathematical notions are collected in Appendix A. The next three appendices present some details concerning the conducted experiments. The book is up to date and its subject is presented in an accessible way with many references to the real internet auctions. This should make the book interesting for a wide audience of readers.