A new end-of-auction model for curbing sniping

R. Malaga, D. Porter, K. Ord, B. Montano

Research output: Contribution to journalArticle

4 Scopus citations

Abstract

The online auction market has been growing at a spectacular rate. Most auctions are open-bid auctions where all the participants know the current highest bid. This knowledge has led to a phenomenon known as sniping, whereby some bidders may wait until the last possible moment before bidding, thereby depriving other bidders of the opportunity to respond and also preventing sellers from obtaining the highest price for an item. This is especially true in the case of the commonly used second-price, fixed-deadline auction. We consider a procedure involving a randomly determined stopping time and show that this approach eliminates the potential benefits to a sniper. The scheme enables all bidders to compete more fairly and promotes an early bidding strategy, which is likely to increase the price received by the seller while providing adequate bidding opportunities for would-be buyers.

Original languageEnglish
Pages (from-to)1265-1272
Number of pages8
JournalJournal of the Operational Research Society
Volume61
Issue number8
DOIs
StatePublished - 1 Aug 2010

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Keywords

  • bidding
  • electronic auctions
  • probability
  • random stopping times
  • sniping
  • uniform distribution

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