Search and Choice in Online Consumer Auctions



Price dispersion in simultaneous online auctions is a puzzle in light of the relatively low search required to find the lower price. We identify some of the influencing factors through a controlled field experiment involving pairs of simultaneous auctions. Keeping the sellers and the goods sold identical between two auctions, we vary auction design features between and within-pairs including shipping cost, minimum bid, secret reserve price, and duration and provide bidders with incentives to search. We use a choice model which examines individual choice between pairs of simultaneous auctions.  We find that within-pair price dispersion is substantial and that prices and auction choice by bidders are related to search costs. We find strong inertia in auction choice and find that this effect significantly interacts with factors such as time left in the auction and search incentives. While individuals do not always choose a lower priced auction, they are more likely do so when search costs are low or search incentives are high.
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Dr. S. Puntoni