Bid or Buy? Individual Shopping Traits as Predictors of Strategic Exit in On-Line Auctions

Abstract

This paper examines the behavioral aspects of bidder conduct in on-line auctions. It utilizes price data from 113 on-line auctions, surveys of winning bidders, and draws upon the consumer behavior and auctions' literature to examine individual trait differences in shopping preferences that predict a buyer's decision to use "strategic exit," the fixed-price Buy-It-Now (BIN) functionality. It argues that impulse-buying tendencies, trait competitiveness, and hedonic need fulfillment are antecedents of strategic exit, and that hedonic need fulfillment moderates the effect of impulse-buying tendencies on strategic exit. Buyers who exit an auction early by using the BIN feature end up paying a higher than average price. Theoretical and practical implications for the design of electronic auctions and the process of selling goods are offered.