American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
The Bidder's Curse: Comment
American Economic Review
vol. 106,
no. 4, April 2016
(pp. 1182–94)
Abstract
The prices of auctions on eBay often exceed eBay's fixed-price "Buy- It-Now" prices. I investigate the causes of this overbidding, focusing on the interpretation in Malmendier and Lee (2011) that the observed overbidding cannot be explained "without allowing for nonstandard preferences or beliefs" and that the "strongest direct evidence points to limited attention." Using data from their study and new data from eBay, I provide evidence that a key condition for identifying nonstandard behavior may not have been met, and that the observed overbidding is not inconsistent with standard behavior once we allow for the likely presence of search costs. (JEL D12, D44, D83)Citation
Schneider, Henry S. 2016. "The Bidder's Curse: Comment." American Economic Review, 106 (4): 1182–94. DOI: 10.1257/aer.20120767Additional Materials
JEL Classification
- D12 Consumer Economics: Empirical Analysis
- D44 Auctions
- D83 Search; Learning; Information and Knowledge; Communication; Belief; Unawareness