ECIS 2020 Research Papers

Abstract

While firms are increasingly adopting multichannel systems, auction research has largely focused on a single-channel context. In this study, we investigate the price dynamics in a unique business model where a posted price channel (or so-called pre-sales) is operated before a Dutch auction market. By combining the analyses at multiple levels, we depict how the information signals from pre-sales can transform bidders’ behavior and consequently, shape the price patterns in the sequential auctions. The price trend or in other words, how the price behaves over multiple auction rounds has attracted the attention of several auctions and market design researches as not only it reflects how bidders learn and their willingness-to-pay overtime but also contradicting findings between the traditional auction theory and empirical evidence (also known as the declining price anomaly) are still not fully resolved. Our results shed light on this phenomenon and how information signals can play a role. We reveal a reduction in the declining rate for lots that were available in the posted price channel and at the same time, as the signal in the pre-sales increases, the results suggest that buyers are likely to allocate more of their demand to the pre-sales lots in the auctions.

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