Online auction: The effects of transaction probability and listing price on a seller's decision-making behavior

Chuan Hoo Tan, Hock Hai Teo, Heng Xu

Research output: Contribution to journalArticlepeer-review

4 Scopus citations

Abstract

This study seeks to the answer the question of how an individual would trade off between listing fee (i.e., cost of listing an auction item) and transaction probability (i.e., the chance that a product will be sold). Applying the trade-off decision-making paradigm into the auction context, we examine a seller's choice of online auction outlet and subsequent starting price strategies when facing the trade-off between transaction probability and listing fee. Results from a set of laboratory experiments suggest that a seller would be willing to incur a high cost in exchange for a higher transaction prospect. Furthermore, if the expected transaction probability is high, a seller is more likely to set a high starting price despite incurring a high listing fee. The implications for theory and practice are discussed.

Original languageEnglish (US)
Pages (from-to)67-79
Number of pages13
JournalElectronic Markets
Volume20
Issue number1
DOIs
StatePublished - Mar 1 2010

All Science Journal Classification (ASJC) codes

  • Business and International Management
  • Economics and Econometrics
  • Computer Science Applications
  • Marketing
  • Management of Technology and Innovation

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