Does the Internet Promote Better Consumer Decisions? The Case of Name-Your-Own-Price Auctions

Abstract

The Internet has enabled consumers to make more informed decisions more conveniently with apparently more efficient price-clearing mechanisms than was available before its advent. One such mechanism is the name-your-own-price auction. The authors study the extent to which decisions made in such an auction are rational in relation to an economic model. The results from two independent markets show that a large number of consumers do not exhibit rational decision making.