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The Bidder's Curse: Comment
American Economic Review (2016)
  • Henry S. Schneider, Cornell University
The prices of auctions on eBay often exceed eBay’s fixed-price “Buy-It-Now” prices. I investigate the causes of this overbidding, focusing on the interpretation in Malmendier and Lee (2011) that the observed overbidding cannot be explained “without allowing for nonstandard preferences or beliefs” and that the “strongest direct evidence points to limited attention.” Using data from their study and new data from eBay, I provide evidence that a key condition for identifying nonstandard behavior may not have been met, and that the observed overbidding is not inconsistent with standard behavior once we allow for the likely presence of search costs.
Publication Date
April, 2016
Citation Information
Henry S. Schneider. "The Bidder's Curse: Comment" American Economic Review (2016)
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