PENNIES FROM EBAY: THE DETERMINANTS OF PRICE IN ONLINE AUCTIONS^*

TLDR

The study explores factors influencing prices of collectible U.S. one‑cent coins in eBay auctions. The authors performed regression analysis on 461 eBay auctions with known book values, drawn from an initial dataset of 20,000 listings.

Abstract

This paper presents an exploratory analysis of the determinants of prices in online auctions for collectible United States one‐cent coins at the eBay web site. Starting with an initial data set of 20,000 auctions, we perform regression analysis on a restricted sample of 461 coins for which we obtained estimates of book value. We have three major findings. First, a seller's feedback ratings, reported by other eBay users, have a measurable effect on her auction prices. Negative feedback ratings have a much greater effect than positive feedback ratings do. Second, minimum bids and reserve prices have positive effects on the final auction price. In particular, minimum bids appear only to have a significant effect when they are binding on a single bidder, as predicted by theory. Third, when a seller chooses to have her auction last for a longer period of days, this significantly increases the auction price on average.