The Bidder's Curse

Lee, Young Han; Malmendier, Ulrike

doi:10.3386/w13699

Cited by 20 publications

(17 citation statements)

References 47 publications

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“…Lee and Malmendier (2007) provide a telling example regarding overbidding in eBay auctions. Lee and Malmendier define a case of overbidding when the final auction price is higher than a posted price for the same good available on eBay itself.…”

Section: Resultsmentioning

confidence: 99%

Psychology and Economics: Evidence from the Field

DellaVigna¹

2007

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Section: Resultsmentioning

confidence: 99%

Psychology and Economics: Evidence from the Field

DellaVigna¹

2007

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“…A linear approximation of a limited attention model, as suggested by DellaVigna (2009) or Lacetera et al (2012), suggests that the inattention parameter, capturing the unexplained 1 See, e.g. Lee and Malmendier (2011) and Brown et al (2010) on internet auctions or Chetty et al (2009) and Finkelstein (2009) on taxes and tolls.…”

Section: Introductionmentioning

confidence: 99%

“…Limited attention has also been documented for purchase decisions in other markets. For instance, Lee and Malmendier (2011) analyze individual bidding behavior in auctions on eBay and find that people tend to anchor on an irrelevant outside retail price for a board game, if the seller chose to state that price in the description of the product details. At the same time, many of the winning bids exceed a more relevant outside option, the so called "buy-it-now" price, which is an ex-ante fixed strike price set by the seller as an alternative to the auction process.…”

Section: Introductionmentioning

confidence: 99%

Price Discontinuities in an Online Market for Used Cars

Englmaier

Schmöller²,

Stowasser

2018

Management Science

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We use more than 63,000 datapoints from a German used car market website to document systematic and substantial price drops at vintage (= year of first registration) thresholds and 10,000 km odometer marks. The latter finding replicates the findings in Lacetera et al. (2012), whereas the first dimension cannot be analyzed with their US data because only German cars have such legally mandated and regulated "birthdates". Hence we have the unique opportunity to study the presence of coarse information processing within the same dataset and decision problem but across two separate domains. We document that discontinuities in these two domains are of comparable size. While Lacetera et al. (2012) explain their result with a left-digit bias in the processing of numerical information, vintage discontinuities cannot be explained by this. We propose a slightly more general model of information prominence and availability bias to accommodate our findings.

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“…Recent research, for example, has shown evidence of inattention to nonsaliently displayed prices (Hossain and Morgan 2006, Lee and Malmendier 2010, Simonsohn and Ariely 2008, to information that competes with attention grabbing or abundant information (DellaVigna and Pollet 2009, Eisensee and Strömberg 2007, Hirshleifer et al 2009), and to future events occurring beyond immediate planning horizons (Che et al 2007, DellaVigna andPollet 2007).…”

Section: Introductionmentioning

confidence: 99%

eBay's Crowded Evenings: Competition Neglect in Market Entry Decisions

Simonsohn

2010

SSRN Journal

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D o firms neglect competition when making entry decisions? This paper addresses this question analyzing the time of day at which eBay sellers set their auctions to end. Consistent with competition neglect, it is found that (i) a disproportionate share of auctions end during peak bidding hours, (ii) such hours exhibit lower selling rates and prices, and (iii) peak listing is more prevalent among sellers likely to have chosen ending time strategically, suggesting disproportionate entry is a mistake driven by bounded rationality rather than mindlessness. The results highlight the importance for marketing researchers of assessing rather than assuming the rationality of firm behavior.

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The Bidder's Curse

Cited by 20 publications

References 47 publications

Psychology and Economics: Evidence from the Field

Psychology and Economics: Evidence from the Field

Price Discontinuities in an Online Market for Used Cars

eBay's Crowded Evenings: Competition Neglect in Market Entry Decisions

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