Ebay ’ S Happy Hour : Non-rational Herding in Online Auctions

Abstract

We hypothesized that on-line auction bidders would herd behind other bidders even when observed choices did not reveal private information. A model that inserts bidders engaging in this type of non-rational herding into a competitive market shows that, in equilibrium, (some) sellers set low starting-price in order to attract low valuation bidders who in… (More)

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