Title: The effects of reserve prices on bidding behaviour in online auctions

Authors: Marla Royne Stafford, Ashley J. Kilburn, Barbara B. Stern

Addresses: Department of Marketing and Supply Chain Management, Fogelman College of Business and Economics, The University of Memphis, Memphis, TN 38152, USA. ' Department of Marketing and Supply Chain Management, Fogelman College of Business and Economics, The University of Memphis, Memphis, TN 38152, USA. ' Rutgers, The State University of New Jersey, 160 East 84th Street – Apt. 16C, New York, NY 10028, USA

Abstract: The influence of reserve prices on bidder behaviour and bidding activity in online auction exchanges is examined. Risk perception theories provide rationale for considering reserve prices as risk-reducing cues in the uncertain environment of online auctions. The aim of this study is to examine the impact of reserve prices on online bidder strategy, and in this way contribute to understanding online consumer behaviour. To do so, we investigated buyers| bidding responses to items with and without a reserve price. A seller|s decision to use a reserve price lowers the buyer|s level of perceived risk such that bidding activity is stimulated and higher final bid prices result. Study results suggest a positive relationship between the use of reserve prices and number of bidders, number of bids and final bid prices.

Keywords: online auctions; consumer bidding; bidding behaviour; consumer behaviour; risk perception; reserve price; internet marketing.

DOI: 10.1504/IJIMA.2006.010738

International Journal of Internet Marketing and Advertising, 2006 Vol.3 No.3, pp.240 - 253

Published online: 28 Aug 2006 *

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