3- eBay

Question 1

What are the 2 main features of the California auction used by eBay?

Answer 1

-2nd price auction
-Dynamic auction: can change bid over time

Question 2

How does eBay’s Proxy bidding work?

Answer 2

Bidders input their maximum price and eBay will automatically bid the minimum required for them to win up to that price

Question 3

What price does eBay display?

Answer 3

Current bid which is the price winner will pay as it stands, or the starting bid set by seller if no bids are made yet

Question 4

What are the 2 possible minimal bids?

Answer 4

-Starting bid (if no bids made yet)
-Current bid + min increment (if not first bid)

Question 5

How does eBay rank bids?

Answer 5

From highest to lowest price, then from earliest to latest date

Question 6

What are the 2 main reasons agents would change their bids on eBay?

Answer 6

-They don’t understand the proxy bidding system, so don’t start by bidding their valuation
-They change their estimates of their valuations based on others’ bids

Question 7

What happens if somebody keeps incrementally bidding below another’s proxy maximum?

Answer 7

They will keep being automatically outbid by the proxy

Question 8

What is the difference between eBay and Amazon auction deadlines?

Answer 8

eBay has hard deadlines whereas Amazon deadlines would extend when bids were placed in last 10 mins

Question 9

What is the main risk/problem with late bidding (sniping)?

Answer 9

There is a material risk bid may not be transmitted due to slow internet connection

Question 10

What is the main benefit of late bidding?

Answer 10

Inexperienced agents who choose to bid incrementally won’t have time to outbid you

Question 11

What is the main benefit of late bidding with interdependent values?

Answer 11

You have more time to gain information from other bidders, and them less from you

Question 12

Why may bidders have private values for a product such as a computer?

Answer 12

Retail prices are easily available and bids convey little information

Question 13

Why may bidders have interdependent values for a product such as an antique?

Answer 13

Retail prices more difficult to obtain and other bidders may know more about the true value than you creating a signal

Question 14

Why is there more late bidding for computers in the eBay hard deadline format?

Answer 14

Inexperienced agents who choose to bid incrementally won’t have time to outbid you

Question 15

Why is there more late bidding within the eBay format for antiques than computers?

Answer 15

You have more time to gain information from other bidders, and them less from you

Question 16

Why is there little difference between late bidding rates within the Amazon format?

Answer 16

Auction extends anyway so hiding information is less effective

Question 17

How do reserve prices work in eBay auctions?

Answer 17

Minimal price for which the good can be sold, not necessarily starting price nor public

Question 18

How do you expand an eBay bidding history to include all automatic bids?

Answer 18

-Note the order of bids next to their time
-Go through each bid sequentially, if there’s a higher bid with an earlier time then it’s a losing bid
-For losing bids, insert the minimum increment above it from the current winner
-For winning bids keep looking at later bids and insert more auto bids if lower

Question 19

Why may bid sniping make eBay auctions inefficient?

Answer 19

Bidders who lose out due to not being able to place a counterbid in time may be frustrated, and sellers would lose out on revenue

Question 20

What is Shill bidding?

Answer 20

Shill bidding is a form of fraud where the seller or their associates place fake bids to artificially inflate the price of an item

Question 21

Why may Shill bidding make eBay auctions inefficient?

Answer 21

Genuine bidders can be deceived into paying more than they should for an item