Seller Pricing Behavior in Auction and Posted-Price Markets

Abstract

Why do some sellers auction their goods, while other sellers post a fixed price? My dissertation investigates this question using theoretical, empirical, and experimental methodologies. The first chapter takes the competitive structure of the market as given and examines how the probability that a good sells, as well as the selling price, differ across auctioned and posted-price goods. The second chapter, my job-market paper, models explicitly the mechanism-choice problem of both buyers and sellers in order to uncover the underlying sources of profitability from each mechanism. The third chapter compares the two mechanisms in an experimental setting where sellers are asked to set either a reserve or posted price as the economic environment changes. The key insight from my dissertation is that the comparison of auctions to posted-price selling is more complicated than has been recognized by the auction literature. Employing structural and reduced-form empirical techniques to field and experimental data, I show that accounting for the competitive structure of the marketplace is vital to understanding sellers' behavior.