Please use this identifier to cite or link to this item: http://scholarbank.nus.edu.sg/handle/10635/27522
Title: EVALUATING THE IMPACTS OF AUCTION BIDDING RESTRICTIONS ON CONSUMER SURPLUS AND BEHAVIORS - AN EMPIRICAL STUDY OF ONLINE PENNY AUCTIONS.
Authors: ZHENG HANXIONG
Keywords: Penny Auction, field experiment, empirical study, surplus distribution
Issue Date: 27-Jul-2011
Source: ZHENG HANXIONG (2011-07-27). EVALUATING THE IMPACTS OF AUCTION BIDDING RESTRICTIONS ON CONSUMER SURPLUS AND BEHAVIORS - AN EMPIRICAL STUDY OF ONLINE PENNY AUCTIONS.. ScholarBank@NUS Repository.
Abstract: Penny auction is an innovative and blooming online auction in which bidders are charged a small fee for placing each bid. A penny auction typically ends up with an extremely low final auction price. Therefore, in each auction, only one bidder can enjoy positive surplus whereas other bidders suffer from bidding costs incurred. In this thesis we firstly provide detail introduction to penny auction as well as its specific features. We then target at solving the bidder retention issue in penny auction which is caused by a skewed distribution of bidder surplus. Specifically, we manage to identify a small group of aggressive bidders who are dominating occasional bidders and win most of the items in penny auction. We design three restrictions on bidding activities on all customers with the intention to limit aggressive bidders¿ behaviors and adjust the skewed surplus distribution. Then we empirically investigate the dynamics of consumer surplus and bidding behaviors by conducting a field experiment. At a macro level analysis we apply Gini coefficient and the Foster-Greer-Thorbecke (FGT) metrics to measure the equality of surplus distribution. At a micro level analysis, bidder¿s participation and bidding behaviors (like number of auctions participated and number of bids placed) are analyzed using multiple econometric models. At first sight, these restrictions may hurt the auction provider¿s profitability. However, our results show these restrictions could enhance overall customer retention rate. The intuition is to restrict the winning probability of a small group of bidders who won most of the auctions so that more bidders can enjoy the thrill and fun of winning an auction, inducing them to bid more at the target website in the long run.
URI: http://scholarbank.nus.edu.sg/handle/10635/27522
Appears in Collections:Master's Theses (Open)

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