Abstract

Frictional costs are defined as the disutility related to the conduct of an online transaction. Thus,
frictional costs can accrue through the consumer‘s decision-making process prior to an online
transaction, e.g., bidding in interactive pricing mechanisms like auctions. We present two models for
the measurement of frictional costs in Name-Your-Own-Price auctions where these costs can either be
measured through a discount factor or in absolute values. We compare the fit and estimation results of
these models by analyzing bidding data from a German NYOP seller. Our results show that both
models are equally parsimonious, explain a comparable fraction of variance and both models yield
robust and reasonable parameter estimates.

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