A pseudo-endowment effect in internet auctions

Bramsen, Jens-Martin (2008): A pseudo-endowment effect in internet auctions.

Abstract

Although bidders in an internet auction do not obtain the actual ownership of the item during the auction, they still act according to an endowment effect. In a unique data set of 17,000 Danish furniture auctions I find that having the leading bid, both in terms of time and dollars, will affect the bidders probability to rebid if outbid. Thus, expectations to own, i.e. “pseudo-endowment ”, seem to affect bidders’ willingness to pay in a relative fast and straightforward manor. Gener- ally, these data therefore support that the reference point, from which we measure losses and gains, is closely related to expectations.

• Item Type: MPRA Paper
• Language: English
• Keywords: Internet auctions, Reference-Dependent Preferences, Endowment Effect, bidding behavior, eBay, WTP, Reference Point
• Subjects: D - Microeconomics > D1 - Household Behavior and Family Economics > D12 - Consumer Economics: Empirical Analysis; D - Microeconomics > D4 - Market Structure, Pricing, and Design > D44 - Auctions; D - Microeconomics > D0 - General > D01 - Microeconomic Behavior: Underlying Principles; D - Microeconomics > D4 - Market Structure, Pricing, and Design

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