Forward-Looking Bidding in Online Auctions

Abstract

At Internet auction sites, such as eBay, nearly identical goods are often sold in a sequence of auctions, separated by small amounts of time. Upcoming auctions are announced several days in advance, so buyers can benefit from forward-looking strategies that take this information into account. This article develops a model of such bidding, provides empirical evidence of the model's relevance to actual behavior on eBay, and discusses the general implications of forward-looking bidding for sequential, auction-driven marketplaces.