TY - JOUR
T1 - Reducing information asymmetry in the auctioning of non-perishable experience goods
T2 - The case of online wine auctions
AU - Onur, Ilke
AU - Bruwer, Johan
AU - Lockshin, Larry
PY - 2020/5
Y1 - 2020/5
N2 - We highlight the importance of reducing the perceived risk associated with information asymmetry for experience goods. We analyse a major online non-perishable experience good, wine, from the seller's perspective. The mechanism for lowering information asymmetry is the verification service offered by the auctioneer. By focusing on unsold items/lots, the wine and auction characteristics affecting the probability of a sale are identified. Results show that the verification of the wine's provenance increases the probability of sale by 5.7 percent and leads to an expected increase of 5.1 percent in the auction price. When both effects are combined, the increase in the expected revenue of the seller is 7.3 percent. We test and find no evidence of selection bias. Given the heterogeneity in wine prices, a quantile regression analysis shows how the results differ for high-priced wines compared to lower priced wines. Results highlight how the mechanisms to lower the degree of information asymmetry work both in attracting bidders to online auctions and encouraging bidders to submit higher bids.
AB - We highlight the importance of reducing the perceived risk associated with information asymmetry for experience goods. We analyse a major online non-perishable experience good, wine, from the seller's perspective. The mechanism for lowering information asymmetry is the verification service offered by the auctioneer. By focusing on unsold items/lots, the wine and auction characteristics affecting the probability of a sale are identified. Results show that the verification of the wine's provenance increases the probability of sale by 5.7 percent and leads to an expected increase of 5.1 percent in the auction price. When both effects are combined, the increase in the expected revenue of the seller is 7.3 percent. We test and find no evidence of selection bias. Given the heterogeneity in wine prices, a quantile regression analysis shows how the results differ for high-priced wines compared to lower priced wines. Results highlight how the mechanisms to lower the degree of information asymmetry work both in attracting bidders to online auctions and encouraging bidders to submit higher bids.
KW - Information asymmetry
KW - Non-perishable experience good
KW - Online auction
KW - Quantile regression
KW - Risk reduction
KW - Wine
UR - http://www.scopus.com/inward/record.url?scp=85078848251&partnerID=8YFLogxK
U2 - 10.1016/j.jretconser.2020.102060
DO - 10.1016/j.jretconser.2020.102060
M3 - Article
AN - SCOPUS:85078848251
VL - 54
JO - Journal of Retailing and Consumer Services
JF - Journal of Retailing and Consumer Services
SN - 0969-6989
M1 - 102060
ER -