An Empirical Analysis of Bidding Fees in Name-your-own-price Auctions

Interactive pricing mechanisms integrate customers into the price-setting process by letting them submit bids Name-your-own-price auctions are such an interactive pricing mechanism, where buyers' bids denote the final price of a product or service in case they surpass a secret threshold price set by the seller If buyers are given the flexibility to bid repeatedly, they might try to Incrementally bid up to the threshold In this case, charging fees for the option to place additional bids could generate extra revenue and reduce incremental bidding behavior Based on an economic model of consumer bidding behavior in name-your-own-price auctions and two empirical studies, we analytically and empirically investigate the effects bidding fees have on buyers' bidding behavior Moreover, we analyze the impact of bidding fees on seller revenue and profit based on our empirical results (C) 2010 Direct Marketing Educational Foundation, Inc Published by Elsevier Inc All rights reserved