Running up the bid: detecting, predicting, and preventing reserve price shilling in online auctions

Online auctions allow the seller to remain anonymous and to easily change identities. Buyers must rely on the seller's description of a product and ability to deliver the product as promised. Internet auction environments make opportunistic behavior more attractive to sellers because the chance of detection and punishment is decreased. In this research, we show how fee structures at eBay, the largest online auction house, motivate shilling behavior. We distinguish between two different types of shilling that exhibit different motivation and behavior: shilling can be used to make the bidders pay more for an item, competitive shilling, and shilling that can be used to avoid paying auction house fees, reserve price shilling. We then use auction data gathered using an Internet-based data collection software agent to examine reserve price shilling using a probit model. We give evidence of reserve price shilling and then show factors that lead to this behavior.

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