Gone in 60 Seconds: Last-minute Bidding on Ebay Auctions

This is a theoretical and empirical study of the delay of bid submission due to strategic last-minute bidding in eBay. We consider a two-period model in which two identical items are auctioned sequentially by different sellers. We show that there is a symmetric equilibrium in which the bidders wait until the last minute to submit their bids in the first auction. The last-minute bidding arises from the sequential structure of the sale and not, as in Ockenfels and Roth (2002, 2005), because last minute bids may not be recorded. Additionally, we prove that the last-minute bidding equilibrium yields the same expected revenue for both auctions. We test the predictions of the theory and confirm the existence of last-minute bidding using eBay bid data from 1,973 auctions of Texas Instruments TI-83 Graphing Calculators. Furthermore, we introduce a new and informative approach of studying bid submission times. We arrange the auctions consecutively according to their closing times and focus on the intervals in between.