Expectation, Disappointment, and Exit: Evidence on Reference Point Formation from an Online Marketplace
| Autor: | Dimitriy V. Masterov, Steven Tadelis, Matthew Backus, Thomas Blake |
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| Rok vydání: | 2021 |
| Předmět: | |
| Zdroj: | Journal of the European Economic Association. 20:116-149 |
| ISSN: | 1542-4774 1542-4766 |
| DOI: | 10.1093/jeea/jvab033 |
| Popis: | We study disappointment and platform exit among new bidders in an online auction marketplace. In particular, we study a hybrid auction format with a “Buy-It-Now” option, which, when executed, will abruptly end the auction and cancel any standing bids. When this happens, if the formerly leading bidder is new to the platform, then they are 6 percentage points more likely to exit the marketplace for every additional day they spent in the lead. This is rationalized by disappointment-averse bidders with outside options and rational expectations about the likelihood of winning. Our explanation is validated by three ancillary predictions: when expectations are lowered by higher competing bids, there is no effect; sensitivity of exit is declining in prior experience; and, for bidders who do not exit, time in the lead during the first experience predicts a subsequent preference for fixed-price, rather than auction, listings. |
| Databáze: | OpenAIRE |
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