The Impact of Seller Expertise and a Refund Guarantee on Auction Outcome: Evidence from an Online Field Experiment of Camera Lens Market

The purpose of this study is to determine if an auction with high seller expertise and a refund guarantee can have a significant impact on consumers’ willing to transact with as well as the actual price premiums received by an online auction business in the context of a thin market. A controlled field experiment was conducted to examine bidders’ behaviors in the four online auction businesses over the course of one year. Fifteen used camera lenses were selected as the product sold in the auctions. The finding suggested that higher seller expertise leads to higher price premiums and higher willingness to participate in the bidding process. And providing a refund guarantee has a positive effect on price premiums, but its effect on willingness to transact is not significant. Finally, contrary to our expectations, results indicates that auctions with no refund guarantee attracted more unique bidders and bids than auctions providing a refund guarantee for the two high seller expertise groups. And bidders adopted entirely different bidding strategies in the two groups.