The Effects of Shilling on Final Bid Prices in Online Auctions

An increasing number of reports of online auction fraud are of growing concern to auction operators and participants. In this research, we discuss reserve price shilling, where a bidder shills in order to avoid paying auction house fees, rather than to drive up the price of the final bid. We examine...

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Main Authors: KAUFFMAN, Robert J., Wood, Charles A.
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Language:English
Published: Institutional Knowledge at Singapore Management University 2005
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Online Access:https://ink.library.smu.edu.sg/sis_research/2141
https://ink.library.smu.edu.sg/context/sis_research/article/3141/viewcontent/download__1_.pdf
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spelling sg-smu-ink.sis_research-31412020-04-24T09:11:07Z The Effects of Shilling on Final Bid Prices in Online Auctions KAUFFMAN, Robert J. Wood, Charles A. An increasing number of reports of online auction fraud are of growing concern to auction operators and participants. In this research, we discuss reserve price shilling, where a bidder shills in order to avoid paying auction house fees, rather than to drive up the price of the final bid. We examine the effect that premium bids have upon the final selling price, since they are linked with reserve price shill bids. We use 10,260 eBay auctions during April 2001, and identify 919 auctions involving 322 sellers and 1583 bidders involved in concurrent auctions for the exact same item. We find that premium bidding occurs 23% of the time, in 263 of the 919 auctions. Using a theoretical perspective involving valuation signals, we show that other bidders may view high bids as signals that an item is worth more. Thus, they may be willing to pay more for the items than others that do not receive premium bids. The implications are disturbing in that sellers may be more motivated to enter a shill bid in order to drive up the final price in an online auction. We also examine and report on alternative hypotheses involving winner’s curse and the possibility of reserve price shill bids. Our results are developed in the context of a weighted least squares regression model that predicts an item selling price-to-average selling price ratio. 2005-01-01T08:00:00Z text application/pdf https://ink.library.smu.edu.sg/sis_research/2141 info:doi/10.1016/j.elerap.2004.10.009 https://ink.library.smu.edu.sg/context/sis_research/article/3141/viewcontent/download__1_.pdf http://creativecommons.org/licenses/by-nc-nd/4.0/ Research Collection School Of Computing and Information Systems eng Institutional Knowledge at Singapore Management University Auctions Econometric analysis Economics E-markets Internet auctions Internet fraud Premium bidding Reserve price shilling Weighted least squares Winner’s curse Computer Sciences E-Commerce
institution Singapore Management University
building SMU Libraries
continent Asia
country Singapore
Singapore
content_provider SMU Libraries
collection InK@SMU
language English
topic Auctions
Econometric analysis
Economics
E-markets
Internet auctions
Internet fraud
Premium bidding
Reserve price shilling
Weighted least squares
Winner’s curse
Computer Sciences
E-Commerce
spellingShingle Auctions
Econometric analysis
Economics
E-markets
Internet auctions
Internet fraud
Premium bidding
Reserve price shilling
Weighted least squares
Winner’s curse
Computer Sciences
E-Commerce
KAUFFMAN, Robert J.
Wood, Charles A.
The Effects of Shilling on Final Bid Prices in Online Auctions
description An increasing number of reports of online auction fraud are of growing concern to auction operators and participants. In this research, we discuss reserve price shilling, where a bidder shills in order to avoid paying auction house fees, rather than to drive up the price of the final bid. We examine the effect that premium bids have upon the final selling price, since they are linked with reserve price shill bids. We use 10,260 eBay auctions during April 2001, and identify 919 auctions involving 322 sellers and 1583 bidders involved in concurrent auctions for the exact same item. We find that premium bidding occurs 23% of the time, in 263 of the 919 auctions. Using a theoretical perspective involving valuation signals, we show that other bidders may view high bids as signals that an item is worth more. Thus, they may be willing to pay more for the items than others that do not receive premium bids. The implications are disturbing in that sellers may be more motivated to enter a shill bid in order to drive up the final price in an online auction. We also examine and report on alternative hypotheses involving winner’s curse and the possibility of reserve price shill bids. Our results are developed in the context of a weighted least squares regression model that predicts an item selling price-to-average selling price ratio.
format text
author KAUFFMAN, Robert J.
Wood, Charles A.
author_facet KAUFFMAN, Robert J.
Wood, Charles A.
author_sort KAUFFMAN, Robert J.
title The Effects of Shilling on Final Bid Prices in Online Auctions
title_short The Effects of Shilling on Final Bid Prices in Online Auctions
title_full The Effects of Shilling on Final Bid Prices in Online Auctions
title_fullStr The Effects of Shilling on Final Bid Prices in Online Auctions
title_full_unstemmed The Effects of Shilling on Final Bid Prices in Online Auctions
title_sort effects of shilling on final bid prices in online auctions
publisher Institutional Knowledge at Singapore Management University
publishDate 2005
url https://ink.library.smu.edu.sg/sis_research/2141
https://ink.library.smu.edu.sg/context/sis_research/article/3141/viewcontent/download__1_.pdf
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