Measuring Consumer Impatience and the Effects of Timing in Name-Your-Own-Price Channels

This paper presents a decision analytic model to determine the optimal bidding sequence in a repeat-bid name-your-own-price (NYOP) channel. The model takes into account the impatience of the bidders, and determines the optimal bidding strategies when time intervals are enforced between successive offers. We also use the model to measure the impatience and the frictional costs exhibited by bidders in an experimental setting. We report the results of an empirical study that is conducted with faculty, staff, and students at the University of Illinois. We discuss the levels of impatience they exhibited when time intervals were enforced between each successive offer. We, then, assess the predictive power of the model and compare the theoretical and the actual bids in a variety of different scenarios. We examine the effects of repeat bidding, and the duration between successive offers on the bidder´s impatience level. Then, we discuss the repeat bidding NYOP setting from the perspective of an auction firm. We observed that firms do not always suffer from allowing multiple bids. They can in fact benefit from repeat bidding, if they set the threshold price appropriately. We analyze how the firm´s profit changes with 1) the threshold price; 2) the number of repeat bids; and 3) the bidder characteristics.