Buyer behavior under the Best Offer mechanism: A theoretical model and empirical evidence from eBay Motors
Journal
Journal of Economic Behavior and Organization
Journal Volume
94
Pages
11
Date Issued
2013-10-01
Author(s)
Huang, Ching I.
Chen, Jong Rong
Lee, Chiu Yu
Abstract
We use data from eBay Best Offer listings to analyze haggling over prices in transactions with one seller and a series of potential buyers for a limited-supply product. We characterize this transaction mechanism as a sequential-move game to investigate buyer behavior. Our model suggests that a buyer's offer price increases in relations to the number of buyers who have previously made an offer on the item and the Buy-It-Now price chosen by the seller. On the other hand, the offer price decreases for items which have been listed on eBay for a longer period of time. We empirically test our theoretical predictions using data on the sales of Toyota Camry cars on eBay Motors. The empirical evidence is consistent with our model. © 2013 Elsevier B.V.
Subjects
Best Offer | E-commerce | EBay | Haggling
Publisher
ELSEVIER SCIENCE BV