Bid-Elicitation Interfaces and Bidding Behavior in Retail Interactive Pricing

Item Type Journal paper
Abstract

Advances in information technology have led to a substantial increase in the use of interactive pricing mechanisms, where buyers (i.e., consumers) and sellers (i.e., retailers) enter a formal computer-mediated price-negotiation process during which consumers submit bids for a specific product. This article examines how the interface used for bid elicitation affects bidding behavior and, ultimately, retailer profit. Our focus is on one key aspect of the bid-elicitation interface - how retailers require bidders to articulate their bids. Evidence from four experiments involving economically consequential bids demonstrates that the candidate bid amounts specified by the retailer have a strong influence on bidding behavior, and consequently also on retailer profit. In particular, the level of candidate bid amounts has a positive effect on actual bid amounts, whereas it has a negative impact on the likelihood that a consumer will actually submit a bid. Critically, we show that the former effect can more than offset the latter to cause an increase in retailer profit. We propose and find support for two distinct pathways driving this phenomenon - the candidate bid amounts (1) influence bidders' valuations of the offered product and (2) shape bidders' beliefs about what bid amounts will be successful. Our results highlight the importance of the design of user interfaces for interactive pricing, demonstrating that even seemingly innocuous aspects of interfaces can have a dramatic impact on bidding behavior and retailer profit.

Authors Spann, Martin; Häubl, Gerald; Skiera, Bernd & Bernhardt, Martin
Journal or Publication Title Journal of Retailing
Language English
Subjects business studies
HSG Classification contribution to scientific community
Refereed Yes
Date March 2012
Publisher Elsevier
Place of Publication Amsterdam
Volume 88
Number 01
Page Range 131-144
Number of Pages 14
ISSN 0022-4359
ISSN-Digital 0022-4359
Publisher DOI 10.1016/j.jretai.2011.06.001
Depositing User Prof. Dr. Emanuel de Bellis
Date Deposited 20 Feb 2013 20:12
Last Modified 23 Aug 2016 11:15
URI: https://www.alexandria.unisg.ch/publications/220722

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Citation

Spann, Martin; Häubl, Gerald; Skiera, Bernd & Bernhardt, Martin (2012) Bid-Elicitation Interfaces and Bidding Behavior in Retail Interactive Pricing. Journal of Retailing, 88 (01). 131-144. ISSN 0022-4359

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https://www.alexandria.unisg.ch/id/eprint/220722
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