Bidding Strategies and Consumer Savings in NYOP Auctions

Mingyu Joo, Tridib Mazumdar, S. P. Raj

Research output: Contribution to journalArticle

18 Scopus citations

Abstract

We investigate how bidding strategies of successful bidders influence the savings they derive from a Name Your Own Price (NYOP) retailer relative to buying the same product from a retailer who posts prices. Utilizing bidding data for hotel room purchases we demonstrate that consumer savings rate depends positively on consumer decision to haggle (# bids ≥3) and on the shape of the bid function. Relative to non-hagglers (# bids ≤2), hagglers who employ a constant bid increment (i.e., a linear) strategy and a decreasing bid increment (i.e., concave) strategy save more, while those who employ an increasing bid increment strategy (i.e., convex) fare no better. A post hoc analysis also shows that hagglers place many bids in the pursuit of higher quality products, while non-hagglers save friction costs by sacrificing quality (e.g., targeting lower star hotels and adjusting the days of travel).

Original languageEnglish (US)
Pages (from-to)180-188
Number of pages9
JournalJournal of Retailing
Volume88
Issue number1
DOIs
StatePublished - Mar 1 2012

Keywords

  • Bidding strategy
  • Haggling
  • NYOP retailers
  • Name Your Own Price auction
  • Priceline
  • Reverse auction

ASJC Scopus subject areas

  • Marketing

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