The second chance offer is a common seller practice on eBay. It consists of price discrimination against the losing bidder, who is offered an identical item at the value of his or her highest bid. Prior work has shown that, if the goods are private-value goods and price discrimination is certain, rational bidders can anticipate it and accordingly modify their bidding strategies; this results in...

A crucial assumption in the optimal auction literature is that each bidder’s valuation is known to be drawn from a unique distribution. In this paper, we study the optimal auction problem allowing for ambiguity about the distribution of valuations. Agents may be ambiguity averse (modeled using the maxmin expected utility model of Gilboa and Schmeidler 1989). When the bidders face more ambiguity...

Pay What You Want (PWYW) can be an attractive marketing strategy to price discriminate between fairminded and selfish customers, to fully penetrate a market without giving away the product for free, and to undercut competitors that use posted prices. We report on laboratory experiments that identify causal factors determining the willingness of buyers to pay voluntarily under PWYW. Furthermore,...

This paper studies an auction design problem for a seller to sell a commodity in a social network, where each individual (the seller or a buyer) can only communicate with her neighbors. The challenge to the seller is to design a mechanism to incentivize the buyers, who are aware of the auction, to further propagate the information to their neighbors so that more buyers will participate in the a...

In this paper, we investigate the information release and pricing strategies for a seller who can take customer pre-orders before the release of a product. The pre-order option enables the seller to sell a product at an early date when consumers’ valuations are relatively homogeneous. We find that the optimal pricing strategy is discontinuous with respect to the amount of information available ...

We analyze selection of an auction format by an informed seller. We model a game with two stages: first, an informed seller announces a good for sale and chooses an auction format from a set of standard auctions; second, privately informed bidders compete for the object. The game has an important signaling element as the auction choice may signal the seller’s type. We study both private and com...

This paper studies the impact of the presence of human subjects in the role of a seller on bidding in experimental second-price auctions. Overbidding is a robust finding in secondprice auctions, and spite among bidders has been advanced as an explanation. If spite extends to the seller, then the absence of human sellers who receive the auction revenue may bias upwards the bidding behavior in ex...

E-commerce systems like eBay are becoming increasingly popular. Having an effective reputation system is critical because it can assist buyers to evaluate the trustworthiness of sellers, and improve the revenue for reputable sellers and E-commerce operators. We formulate a stochastic model to analyze an eBay-like reputation system and propose four measures to quantify its effectiveness: (1) new...

This paper studies ex-ante investment incentives of a buyer (a content provider) facing a monopoly input seller (an internet service provider), who employs second-degree price discrimination. As a benchmark, we extend an adverse-selection model by a noncontractible investment stage, which allows the buyer to improve her type. The buyer underinvests due to partial rent extraction by the seller. ...

We deal with dynamic revenue management (RM) under competition using the nonatomic-game approach. Here, a continuum of heterogeneous sellers try to sell the same product over a given time horizon. Each seller can lower his price once at the time of his own choosing, and faces Poisson demand arrival with a rate that is the product of a price-sensitive term and a market-dependent term. Different ...