Effect of Market Information on Bidder Attrition in Online Auction Markets
Authors: Ghasemkhani, Hossein; Goes, Paulo; Tripathi, Arvind K
Journal: MIS Quarterly (2022)
<jats:p>Information generated in online markets can affect both buyers’ and sellers’ expectations and therefore their choices. In this research, we investigate the effect of market information, generated in online auction markets, on buyers’ expectations and choices. To clear large inventories, sellers often conduct many auctions selling identical items over time, which creates an online auction market where competition dynamics spill over from one to auction to another. In these markets, bidders can participate in many auctions over a period of time, observe market information (supply, demand, and competition), and gain experience to increase their payoffs. We observe that despite having an opportunity to compete and win in future auctions, many bidders stop participating in these auction markets. We argue that observed market information affects their choices. We explore how bidders form expectations about market supply, demand, and competition based on information from two sources—market design parameters and behavior of market participants. By employing a hierarchical Bayesian latent attrition model, we empirically detect and investigate the effect of bidders’ expected market…