Reference price effect and its implications for decision making in online auctions: An empirical study

Simultaneous supplies of an item by multiple online auction vendors greatly reduce the burden of arduous search that a consumer has to conduct in a brick-and-mortar market. The enriched information set endows all auction participants with added decision flexibility and complexity. One of such flexibilities or complications is the potential of information cross-referencing. In this study, we empirically tested if and how bidders interacted with each other through cross-referencing. Our results strongly supported the existence of cross-referencing. We also identified new strategies and tactical moves as best responses for sellers and bidders under the online simultaneous condition. This research provided another support for the path-dependent nature of online auctions as bidders were found to actively adjust their behavior in avoidance of winner's curse.