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This research by Ariely et al (2005) was motivated by comparisons of bidders behavior on Amazon and eBay.

Late bidding has been observed in internet auctions in eBay and Amazon. It is influenced by the rules that govern the internet auction endings The internet auctions offer new opportunities for examining the effects on ending rules on bidding behavior because internet auction houses such Amazon and eBay employ basically similar rules save for the rules that govern the auctions endings. There are other differences between internet auction houses that makes it hard to attribute the variations in observed behavior to the different ending rules Because of the above stated reason, the researchers presented a laboratory experiment which was intended to compliment the field data by controlling all the variations save for those in auction rules so as to clearly examine the way rules contribute to differences in bidding behavior. How do the different auction ending rules contribute to differences in bidding behavior? The main difference between Amazon and eBay auction rules is that eBay auction usually have a deadline that is fixed also known as hard close. They thus end at a programmed time, usually after seven days. On the other hand Amazon auctions are repeatedly extended if needed, past the planned end time, until ten minutes have passed without any bidding having been submitted.

Hard close or fixed deadlines generate incentives for bidding late even in the simplest case of entirely private values. Multiple strategic incentives induced by the auctions' ending rules are the cause of the difference in bidding timing Different auction ending rules draw out dissimilar calculated incentives in private-value auction as well Numerous calculated incentives brought about by the auctions' ending rules usually result to variations in bidding time The study was conducted using 30 groups which had 6 participants each (8 groups each in Amazon, eBay.8, and eBay l, and 6 in sealed bid).

In every group pairs of two bidders were randomly re matched for 20 auctions for every bidder. A matching error in trial 19 caused several auctions to have one bidder and others to have three, this caused all the data in all eBay.8 auctions numbers 19 and 20 to be unmatched. It was just the results for trials 1-18 of each and every one of the conditions was reported with the aim of simplifying the comparisons. The researchers then run the auctions on networked computers using the zTree software toolbox by Fischbacher (1998). In every treatment, every rule was publicly explicated using example auctions In every auction, every participant saw on his screen both public and private information, updated after every period. Private information contained the private value of the bidders , personal highest submitted bid thus far, and a list of the auctions the bidder had won previously together with corresponding profits. Both bidders knew public information such as the auction numbers (between 1 and 20), the period number in their current auction, the type of period (stage 1 or 2), as well as the current price Participants were paid all their earnings in each and every bid that they took part in, and also a fee of 5 dollars for showing up and an extra $5 if they arrived five minutes earlier. The researchers used 30 groups which had 6 participants each. This means that the study had 180 subjects or participants The participants were randomly assigned to every type of auction to make sure that there were no systematic variations in bidder attributes across auctions, and the number of bidders for every auction was held constant. Every bidder in this experiment took part in a series of auctions, this allowed the researchers to examine thoroughly the way bidding varies as bidders acquire experience within the environment in which the auction takes place The study experimental results mirrored the main Internet observation- the fact that in the fixed-deadline (eBay) there is more late bidding conditions than in the regular time extension (Amazon) condition. The figure below shows the percentage of bidders who place stage 2 bids over time. The figure below shows the number of stage 1 bids per bidder over time by auction number

Bidders are usually less likely to bid late when they get bidding experience in the Amazon condition and they are more apt to place bids late in the eBay conditions In eBay condition, early bidding usually does not pay because the payoff for the bidder is considerably negatively correlated with own stage1 bids number as the corresponding coefficient for the Amazon condition is insignificant. This research sought to investigate the effects of the closing rules of auction on bidding behavior The researchers confirmed that under controlled conditions, the differences in ending rules between Amazon and eBay is enough to generate behavior patterns often seen in the field data. Bidders usually bid late more in the eBay fixed ending rule than in the Amazon involuntary extension rule. This trend usually increase with the experience of the bidder. There is significant increased bidding which decreases but does not get eliminated with experience. Ariely, Dan, Ockenfles, Axel, and Roth Alvin. An Experimental Analysis of Ending Rules in Internet. The RAND Journal of Economics, Vol. 36, No. 4 (Winter, 2005), pp. 890-907.