Curious about the price? Consumers’ behavior in price reveal auctions

ABSTRACT

We exploit some specific features of a peculiar online selling mechanism, the so-called price reveal auctions, to empirically investigate how consumers’ behaviour changes in response to an item’s ‘social attributes.’ We document a significant effect of the item’s brand and portability in influencing consumers’ willingness to pay. We show that, although both characteristics have some explanatory power when considered in isolation, it is their interaction that really matters.

KEYWORDS:

• Price reveal auction
• willingness to pay
• social attributes
• positional goods

JEL CODES:

• D44
• D12

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

¹ PRAs belong to the family of so-called ‘pay-per-bid auctions’, which also include penny auctions (Augenblick, 2016; Hinnosaar, 2016) and lowest unique bid auctions (Gallice, 2009; Eichberger and Vinogradov, 2015). Gallice (2016) investigates PRAs from a theoretical point of view.