If there is no snipping (auction is closed only when no bids are submitted for a certain duration), the auction theory predicts that buyers should slowly increase their bids until the highest bid exceeds their WTPs
The open English auction mechanism induces truth revealing of WTPs (price points where bidders drop from the auction)
Revenue = Second highest WTP
Predicted Versus Actual Bids and Reserve Price ? ? Reserve Price ? 99% Bid as % of WTP (except winners) Actual Behaviors Predicted By Auction Theory
Prices at Each Round Round 5 Round 4 Round 3 610.0 610.0 Round 2 732.0 Round 1 3 rd highest WTP Price of 2 nd item Price of 1 st item Round 6 - - 580.0 - - 631.0 825.0 646.4 615.0 656.5 702.0 799.0 777.0 671.0 790.0
Predicted Versus Actual Bids and Reserve Price Reserve Price 85% 99% Bid as % of WTP (except winners) Actual Behaviors Predicted By Auction Theory
Revelation Principle : All buyers (except the winner) end up revealing their WTPs for the item to the sellers. Put differently, sellers can “discover” distribution of buyers’ WTPs via the auction mechanism. This is not the case for other pricing mechanisms (e.g., seller posted price and priceline model)
Application : Use open English auction to discover the distribution of WTPs and then use seller posted price model to maximize share of surplus
Listings - New listings totaled a record 348.0 million in Q3-04, 48% higher than the 234.6 million listings reported in Q3-03.
Confirmed Registered Users - Cumulative confirmed registered users at the end of Q3-04 totaled a record 125.0 million , representing a 46% increase over the 85.5 million users reported at the end of Q3-03.
Active Users - Active users, the number of users on the eBay platform who bid, bought, listed or sold an item over the trailing 12 months, increased to 51.7 million , a 38% increase over the 37.4 million active users reported in the same period a year ago.