The role of auction duration in bidder strategies and auction prices

Abstract

In online auction research, sellers' and buyers' strategies have been largely examined as separate research streams and their interdependencies have not been adequately explored. This deficiency is a serious limitation since an integrative approach could build the conceptual bridge necessary to provide sellers and buyers with a deeper understanding of how to achieve desired auction outcomes. Consequently, the present study integrates these two perspectives by proposing that the seller's auction duration strategy impacts the effectiveness of bidders' strategies in the forms of both winning likelihood and surplus extraction. We drew upon the concept of bidders' time costs and information asymmetry to build our hypotheses. Field data collected from eBay supported our model and demonstrated significant differences in bidders' winning likelihood and surpluses across auctions with shorter and longer durations. The results suggested that online bidders should pay closer attention to auction duration since it can affect their surpluses and odds of winning. For instance, opportunists or last-minute bidders can improve their odds of winning significantly if they choose to participate in seven-day auctions rather than in one-day auctions.