An Investigation Of Willingness To Spend Dynamics In Simultaneous Online Auctions

Author: 

Mayukh Dass

Abstract: 

Willingness to spend (WTS), as defined by the amount a bidder is willing to spend in a particular auction event, is a crucial component for an auction’s success. This paper investigates the dynamics of WTS of a simultaneous online auction of a specific genre of fine art called modern Indian art and compare it with the dynamics of cumulative Willingness to pay (WTP), using an innovative statistical method called Functional Data Analysis. Functional Data Analysis, which is fundamentally considered to recover the underlying WTS and cumulative WTP function curves of each bidder, is further used to examine the effects of current number of bids, current number of lots winning, pre-auction low estimate of the lots they are currently winning, bid time, and number of proxy bids on WTS and cumulative WTP dynamics. Results suggest that only current number of bids and bid time have significant positive effect on the bidder WTS, whereas only current number of bids have influence on cumulative WTP. Implications for auction house managers are further discussed in the paper.

Key Word: 

Published Date: 

February, 2011

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