8. Online Markets Flashcards
What are online markets
They include virtual/internet trading platforms as well as direct retailing from trader websites and online marketing activities
What are the four types of auction and explain them
-First price: each bidder submits single sealed bud highest bidder wins and pays that price
-Second price: each bidder submits single sealed bud highest bidder wins but pays the price of the second highest bidder
-English: ascending price, bidders drop out, last surviving bidder wins
-Dutch: descending price, first bid wins
What does Vickrey show about the four types of auction?
Given independent private values and risk neutrality, all four types of auction generate the same revenue
Describe DLR’s 1999 experiment
-set up multiple types of auctions for selling magic cards of equal value
-he paired Dutch and first price together and second price and English together
Results of DLR 1999 experiment
-Dutch auctions tend to raise 30% higher revenue than first price auctions
-no statistical difference between second price and English
What is the idea of endogenous bidder entry?
-in the lab there is control of participants to treatments
-however in DLRs field experiment individuals choose to participate which could lead to a self selection bias in who picks each auction type
What follow up test did DLR do which accounted for endogenous bidder entry?
He tested the bid prices which the same individuals placed for the same goods in different auction types
Describe the H&M experiment on split prices in online markets.
Operated as sellers on eBay with multiple seller IDs with zero feedback. They used treatments of low starting bid with high shipping cost and high starting bid with no shipping cost
Results of H&M experiment on price splitting
Setting low opening bids with high shipping costs generated more revenue. However this could be because more buyers are attracted to the initial low opening bid so there is greater volume
Describe the experiment of P.Resnick et al on the value of reputation on eBay
-collaborated with established high reputation “strong” seller
-set up new identities with no reputation
-compared listings of matched items’ selling rates and prices sold at
Results of P. Resnick et Al experiment on reputation
Reputation appears to matter. Although a small negative reputation didn’t effect anything
Findings of Ong & Wang 2015 experiment on online dating
Men of all income levels visit female profiles of all income levels at roughly equal rates. In contrast women of all income levels visit male profiles with higher incomes at higher rates. This is especially true for females who earn a high income
Results of Gachter et Al 2009 on framing effects
Junior experimental economists are effected by the description of the task they face but this isn’t the case with more senior members of the subject pool
