Reducing information asymmetry in the auctioning of non-perishable experience goods: The case of online wine auctions

Ilke Onur, Johan Bruwer, Larry Lockshin

Research output: Contribution to journalArticlepeer-review

3 Citations (Scopus)

Abstract

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.

Original languageEnglish
Article number102060
Number of pages13
JournalJournal of Retailing and Consumer Services
Volume54
DOIs
Publication statusPublished - May 2020
Externally publishedYes

Keywords

  • Information asymmetry
  • Non-perishable experience good
  • Online auction
  • Quantile regression
  • Risk reduction
  • Wine

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