The Impact of Online Auction Duration

Abstract

One view regarding auction duration suggests that longer auctions would result in more bidders and more bids, which in turn would result in higher prices. An opposing view is that shorter auctions might appeal to impatient bidders, or alternatively that shorter duration might lead to more competitive dynamics. To examine these competing notions, we conduct pair-wise comparisons of simultaneous auctions identical in all but duration. The auctions are conducted on two different platforms—eBay and a local auction site. We find that in eBay auctions, longer duration increases the number of bidders and bids and consequently increases final prices by about 11%. In the local auction website with far fewer auctions and a more steady set of participants, the effect is reversed and shorter auctions generate higher prices by about 20%. Both sets of effects are robust and significant. We look at bidding activity on both sites to try to get at the root of that reversal. We find that in eBay auctions, the higher price in the longer duration auction is accompanied by a higher number of participating bidders and a higher number of bids placed in the auction. In the local site, we find that the auction duration does not significantly affect the number of participating bidders or the number of bids placed in an auction. However, the magnitude of jump bids is negatively and significantly correlated with duration. These jump bids are in turn shown to impact final prices.