Interesting Results
Online Auction Pricing
How can a seller in an online auction increase the price he or she receives for an item? By providing a reserve price, according to a recently published study. The authors sold items in 192 eBay auctions and measured the effect of providing reserve prices (the lowest price at which the product would be sold) and minimum bids accepted for participation in the auction. They found that final prices were highest when sellers gave a reserve price. Providing only minimum bids led to lower final prices than providing reserve prices and providing no pricing information.
Final prices received when both reserve prices and minimum bids were given were not significantly different than when only reserve prices were given, but the dynamics of the auctions were different. When only the reserve price was given, there were more bidders than when both a minimum bid and a reserve price were given.