Sequencing strategies in large, competitive, ascending price automobile auctions: An experimental examination

Abstract

This paper reports on a large scale field experiment testing strategies available to a seller participating in simultaneous competitive sequential, ascending price automobile auctions. Every other week, the seller offered approximately 120 vehicles for sale in an auction environment in which several competitive sellers offered on the order of 3,000 vehicles. The experiment tested various sequences in which the seller could offer the vehicles, such as high values first or low values first. Surprisingly, and contrary to intuition drawn from the theory of single item and single seller auctions, the worst performing sequence from those tested is for the seller to order vehicles from highest to lowest values. The best sequence is to group the vehicles by type and offer the low valued vehicles first and then move to offer the higher valued vehicles. Our conjecture is that this sequence reduces the competition with other sellers for the attention of specialized buyers. JEL classification numbers: D440, L620, L810, C930, C900

Cyber-Shilling in Automobile Auctions: Evidence from a Field Experiment

“…Harrison and List (2004). 13 The scale of the experiment is comparable to that of the sequencing experiments with used car auctions reported in Grether and Plott (2009). Relatedly, Tadelis and Zettelmeyer (2009), use field experiments with a used automobile auction company to explore how providing more information (in the form of "Standardized Condition Reports" describing a used car's condition) to bidders affects auction outcomes, particularly revenues.…”

Multiunit Auctions

“…The simultaneous FPSB auctions give a higher chance of winning to weak bidders, and generate more entry on their part. Grether and Plott consider revenue‐maximizing sequencing in a field experiment on sequential automobile auctions. Interestingly, they report that the worst performing sequence is for the seller to order vehicles from highest to lowest values.…”

“…Unlike Goeree et al . , Grether and Plott study a setting with seller competition, where several sellers simultaneously sell vehicles in sequential ascending price auctions.…”

Price Determinants on Used Car Auction in Taiwan

“…Mileage of the car and its age affects a decision of car owner to sell a car, thus influencing the price of the car (Lapparent and Cernicchiaro, 2012). There are also certain external elements that influence car price, and those elements could be economic situation, household income that affects demand and thus influences supply, cost of fuel and other factors (Gil-Pareja, 2003;Matas and Raymond, 2008;Grether and Plott, 2009).…”

“…Buyer cannot have test-drive before purchasing vehicle, only visual inspection is allowed. This research focuses on auctions data to examine price determinants for two reasons: first, car dealers have many years of experience in this business and during the auction they use very limited data to choose the car; since dealers need to add their markup to receive a profit and choice of the right car will affect their business in the future, they tend to choose the right car and pay the real market price for it Genesove (1993); Grether and Plott (2009) secondly, the auction provides detailed information on its successful deals for the duration of the auctions, and the data can be easily extracted for further analysis (Grether and Plott, 2009).…”