Choice Model Estimation of Bidder Valuations in Paired English Auctions

In the extant empirical auction literature, differential bidder valuations between two auctions that are different in some attributes or features (such as buy-it-now option, secret reserve price, etc) are typically computed in one of two ways: (1) by comparing final prices in the two auctions or (2) by looking at bid histories as indicative of willingness to pay. The first approach ignores potentially valuable information from bidders' actions in the auction; the second requires fairly restrictive (and empirically unsupported) assumptions regarding the bidding behavior. In addition to these shortcomings, the extant literature typically approaches the estimation task under the assumption of a standalone auction, even though most auctions face competition from other auctions and auction bidders are typically faced with a choice between competing auctions. We propose an alternative approach that estimates valuations through a logit choice model. This approach benefits from the use of all available observations, but it does not require restrictions on how bidders arrive at their bids. We compare the accuracy and usefulness of the three models.



Citation:

Ernan Haruvy and Peter Popkowski Leszczyc (2011) ,"Choice Model Estimation of Bidder Valuations in Paired English Auctions", in AP - Asia-Pacific Advances in Consumer Research Volume 9, eds. Zhihong Yi, Jing Jian Xiao, and June Cotte and Linda Price, Duluth, MN : Association for Consumer Research, Pages: .

Authors

Ernan Haruvy, Univesity of Texas at Dallas
Peter Popkowski Leszczyc, University of Alberta, USA



Volume

AP - Asia-Pacific Advances in Consumer Research Volume 9 | 2011



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