Vendor bidding on online auctions

This article examines the legal protection of consumers from vendor bidding on New Zealand online auctions sites. The current lack of legal control over online vendor bidding is contrasted with the more restrictive legal position taken in respect of vendor bidding in traditional auctions. The article argues that online vendor bidding is misleading in nature and harmful to consumers. It argues that the law is justified in intervening in order to prevent or discourage the practice. Suggestions are made for a multilayered legal approach to the problem.

The influence of seller strategy on the winning price in online auctions: A moderated mediation model

This paper examines the impact of seller strategy on winning prices in online auctions. In our conceptual model, three strategic choices made by the seller - minimum opening price, auction length, and use of a hidden reserve price - are mediated by the number of bids placed during the auction and moderated by product type. Our tests analyze eBay auction data for four consumer products through two matched studies (two products per study). In particular, we compare products for which value is easily determined with those for which value is less clear. Overall, we find strong evidence of the effects of minimum opening price and hidden reserve prices on final winning prices. The impact of auction length on winning price is less clear. In general, our tests support the idea that potential buyers rely more on signals such as opening price and reserve price for products for which reference prices are less available.     

Takeover Contests, Toeholds and Deterrence

We consider a setting in which two potential buyers, one with a prior toehold and one without, compete in a takeover modeled as an ascending auction with participating costs. The toeholder is more aggressive during the takeover process because she is also a seller of her own shares. The non-toeholder anticipates this extra-aggressiveness of the toeholder. Thus, he is deterred from participating unless he has a high valuation for the target company. This leads to large inefficiency losses. For many configurations, expected target returns are first increasing then decreasing in the size of the toehold.     

On the convergence of genetic learning in a double auction market

We study the learning behavior of a population of buyers and a population of sellers whose members are repeatedly randomly matched to engage in a sealed bid double auction. The agents are assumed to be boundedly rational and choose their strategies by imitating successful behavior and adding innovations triggered by random errors or communication with other agents. This process is modelled by a two-population genetic algorithm. A general characterization of the equilibria in mixed population distributions is given and it is shown analytically that only one price equilibria are attractive for the GA dynamics. Simulation results confirm these findings and imply that in cases with random initialization with high probability the gain of trade is equally split between buyers and sellers.     

Role of credence and health information in determining US consumers' willingness-to-pay for grass-finished beef

Consumer demand for forage- or grass-finished beef is rapidly emerging in the US. This research uses data elicited from consumer surveys and experimental auctions to provide insight on product attributes (taste/flavour, credence and nutritional characteristics) and socio-demographic factors that are most important in determining US consumers' preferences and willingness to pay premiums for grass-finished versus grain-finished beef. Information related to beef production processes increased the probability consumers would be willing to pay a premium for grass-fed beef. However, it appears that health-related messages are more important drivers of willingness-to-pay, on average, than the absence of antibiotics and supplemental hormones and traceability. Labelling information regarding grass-fed beef's nutritional content and related production processes is vital for maintaining and growing premium niche markets for grass-fed beef in the US. The relative size of the willingness to pay estimates compared to previous cost estimates suggest that the Australian beef industry may have a comparative advantage for finishing beef on forage and marketing premium grass-fed differentiated beef products in the US market.     

Opportunity cost of spectrum for mobile communications: Evaluation of spectrum prices in Bangladesh

The purpose of this study is to focus attention on the choice of the reserve price made by the telecom regulator to explain the under-performance of spectrum auctions in Bangladesh. The overestimation of the reserve prices for several auctions in Bangladesh including the auction of the 3G – 2100 MHz band in 2013, the 2G - 1800 MHz band in 2015, and the 4G – 1800 and 2100 MHz bands in 2018 is established by comparing the reserve prices to the economic value of spectrum, determined by using the engineering valuation and production function approaches. Possible reasons for the inflation of the reserve price are discussed.     

Ranking reversals in asymmetric auctions

This paper compares the first-price auction and the second-price auction with several asymmetric bidders who are either weak or strong. The ranking of these auctions in terms of profit may flip as the exogenous reserve price or the number of weak or strong bidders change. Similarly, with endogenous reserve prices the ranking may depend on the seller’s own-use valuation. In other words, the ranking may be fragile to changes along these dimensions. Existing models rule out such ranking reversals by imposing substantial structure on type distributions. The current paper relies on simple mechanism design arguments that require less structure.     

Ranking asymmetric auctions: Filling the gap between a distributional shift and stretch

I consider first-price auctions (FPA) and second-price auctions (SPA) with two asymmetric bidders. The FPA is known to be more profitable than the SPA if the strong bidder's distribution function is convex and the weak bidder's distribution is obtained by truncating or horizontally shifting the former. In this paper, I employ a new mechanism design result to show that the FPA remains optimal if the weak bidder's distribution falls between the two benchmarks in a natural way. The same conclusion holds if the strong bidder's distribution is concave, but with a vertical shift replacing the horizontal shift. A result with a similar flavor holds if the strong bidder's distribution is neither convex nor concave. The dispersive order and the star order prove useful in comparing the weak bidder's distribution to the benchmarks. A key step establishes a relationship between these orders and reverse hazard rate dominance.     

Influence in private-goods allocation

We reinterpret the ‘bossiness’ of a private-goods allocation rule (Satterthwaite and Sonnenschein, 1981) as the ability of an agent to ‘influence’ another’s welfare with no change to her own welfare. In applications where non-bossiness is not possible, we propose simple conditions on (1) which agents may have influence (acyclicity and preservation), and (2) the welfare consequences of influence (positivity and oppositeness). We apply these conditions to three well-known bossy rules: the ‘Vickrey rule’ in single-object auctions (Vickrey, 1961) (acyclic, positive), the ‘doctor-optimal stable rule’ in matching with contracts (Hatfield and Milgrom, 2005) (acyclic, positive, preserving) and ‘generalised absorbing top-trading cycles (GATTC) rules’ in housing markets with indifferences in preferences (Aziz and Keijzer, 2011) (acyclic, opposite, preserving). Under mild restrictions, we show how the nature of influence under a strategy-proof rule determines whether or not it satisfies weak group-strategy-proofness (requires acyclicity and either positivity or preservation), weak Maskin monotonicity (acyclicity and positivity) and Pareto-efficiency (acyclicity and oppositeness). In addition, we propose an influence-related generalisation of the efficiency-adjusted deferred acceptance mechanism in school choice (Kesten, 2010), and characterise influence for strategy-proof GATTC rules in housing markets.     

Ascending prices and package bidding: Further experimental analysis

We explore the performance of multi-round, price-guided combinatorial auctions for a previously untested class of value profiles in which synergies arise from shared fixed costs. We find that, in many cases, a simulator that bids straightforwardly does well in predicting auction performance, but exceptions arise because human bidders sometimes rely on cues besides prices to guide their package selection and because they sometimes bid aggressively on items for which they have no value in order to increase payments by bidders seeking complementary packages. In our experiments, this latter behavior not only raises prices, but can also improve efficiency by mitigating the threshold problem. Comparisons between a combinatorial clock auction (CCA) and a simultaneous ascending auction (SAA) are reported.