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- Title
Auctions with a buy price.
- Authors
Reynolds, Stanley; Wooders, John
- Abstract
eBay and Yahoo allow sellers to list their auctions with a buy price at which a bidder may purchase the item immediately. On eBay, the buy-now option disappears once a bid is placed, while on Yahoo the buy-now option remains in effect throughout the auction. We show that when bidders are risk averse, both types of auctions raise seller revenue for a wide range of buy prices. The Yahoo format raises more revenue than the eBay format when bidders have either CARA or DARA. Bidders with DARA prefer the eBay auction, while bidders with CARA are indifferent between the two.
- Subjects
INTERNET auctions; AUCTIONS; EBAY Inc.; YAHOO! Inc.; BIDDERS; BID price
- Publication
Economic Theory, 2009, Vol 38, Issue 1, p9
- ISSN
0938-2259
- Publication type
Article
- DOI
10.1007/s00199-006-0182-7