Disarming the bid sniper

Trevathan, Jarrod, and Read, Wayne (2011) Disarming the bid sniper. Journal of Electronic Commerce Research, 12 (3). pp. 176-186.

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Abstract

Bid sniping is the most common strategy used in online auctions whereby the bidder places a bid in the closing seconds in order to win the auction. This denies other bidders the time to react and suppresses the final price. While bid sniping is beneficial to the winner, it disadvantages other bidders and the seller does not get the full amount of revenue s/he might otherwise have received in a truly competitive and fair auction. This paper proposes a method to help negate bid sniping as a dominant strategy for winning in online auctions. We propose an amendment to the auction format that allows for a random undisclosed time-out extension should new bids be received in the closing moments. This entices bidders to bid their true valuation up front, otherwise they risk having the auction terminate and therefore not accept any new bids. Several variations of the amended auction format are presented that effectively counteract bid snipers by making it difficult to gain any information by observing the underlying algorithm. To ensure the auction does not continue indefinitely, the format includes mechanisms that place random bounds on the size of, and number of extensions permitted. Our proposal also makes intelligent decisions to maximize the price for the seller based on the auction's bid volume. The size of the extension granted is based on the timing and aggressiveness of how bids are being submitted. To our knowledge, no existing online auctioneers offer such a comprehensive format for actively discouraging bid sniping.

Item ID: 18745
Item Type: Article (Refereed Research - C1)
Keywords: online auctions, e-commerce, software bidding agents, sealed bid auction, proxy bids
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ISSN: 1526-6133
Date Deposited: 31 Oct 2011 11:32
FoR Codes: 08 INFORMATION AND COMPUTING SCIENCES > 0806 Information Systems > 080699 Information Systems not elsewhere classified @ 100%
SEO Codes: 89 INFORMATION AND COMMUNICATION SERVICES > 8999 Other Information and Communication Services > 899999 Information and Communication Services not elsewhere classified @ 100%
Citation Count from Web of Science Web of Science 2
Downloads: Total: 2
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