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A Field Study of the Effects of Minimum and Reserve Prices on Internet Auction

Authors:

Michael A. Kamins
Xavier Drèze
Valerie S. Folkes

Publisher:

Journal of Consumer Research
2004, Vol. 30 (4), 622-628

Abstract:

A field experiment investigated the impact of two external reference points under the seller's control on the final price of an item. When the seller of an item specified a high external reference price (a reserve price), the final amount bid was greater than when the seller specified a low external reference price (a minimum amount bid). When the seller provided both high and low reference prices, only the high, reserve price influenced the final amount. Moreover, the low reference price led to a lower final amount compared to when the seller did not communicate any reference price. The number of bidders mediated the effect of the absence of seller-supplied reference prices on the final auction outcome.