NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Matthew Backus

Graduate School of Business
Columbia University
3022 Broadway, Uris Hall 619
New York, NY 10027

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NBER Program Affiliations: IO
NBER Affiliation: Faculty Research Fellow

NBER Working Papers and Publications

January 2017Expectation, Disappointment, and Exit: Reference Point Formation in a Marketplace
with Thomas Blake, Dimitriy V. Masterov, Steven Tadelis: w23022
We study expectation-based reference point formation using data from an online auction marketplace. We hypothesize that exit from the marketplace is affected by disappointment from abruptly losing an auction after being the leading bidder. Expectation-based reference points that evolve over time imply that a bidder who spends more time in the lead prior to an abrupt loss will suffer a higher degree of disappointment. We find that for every additional day in the lead, bidders who lose abruptly are 6 percentage points more likely to exit. In contrast, losing bidders whose expectations are informed by early, competing bids, show no effect at all. Also, consistent with our theoretical model, more experienced bidders are less sensitive to time spent in the lead.
June 2016Dynamic Demand Estimation in Auction Markets
with Gregory Lewis: w22375
Economists have developed empirically tractable demand systems for fixed price markets. In contrast, empirical auction techniques treat each auction in isolation, ignoring market interactions. We provide a framework for estimating demand in a large auction market with a dynamic population of buyers with unit demand and heterogeneous preferences over a finite set of differentiated products. We offer an empirically tractable equilibrium concept under which bidders behave as though they are in a steady-state, characterize bidding, and prove existence of equilibrium. Having developed a demand system, we show that it is non-parametrically identified from panel data, and that this result is robust to typical data limitations, reserve prices, random coefficient demand, public signals that refine ...
June 2015Cheap Talk, Round Numbers, and the Economics of Negotiation
with Tom Blake, Steven Tadelis: w21285
Can sellers credibly signal their private information to reduce frictions in negotiations? Guided by a simple cheap-talk model, we posit that impatient sellers use round numbers to signal their willingness to cut prices in order to sell faster, and test its implications using millions of online bargaining interactions. Items listed at multiples of $100 receive offers that are 5% - 8% lower but that arrive 6 - 11 days sooner than listings at neighboring "precise" values, and are 3% - 5% more likely to sell. Similar patterns in real estate transactions suggest that round-number signaling plays a broader role in negotiations.
February 2015Is Sniping A Problem For Online Auction Markets?
with Tom Blake, Dimitriy V. Masterov, Steven Tadelis: w20942
A common complaint about online auctions for consumer goods is the presence of "snipers," who place bids in the final seconds of sequential ascending auctions with predetermined ending times. The literature conjectures that snipers are best-responding to the existence of "incremental" bidders that bid up to their valuation only as they are outbid. Snipers aim to catch these incremental bidders at a price below their reserve, with no time to respond. As a consequence, these incremental bidders may experience regret when they are outbid at the last moment at a price below their reservation value. We measure the effect of this experience on a new buyer's propensity to participate in future auctions. We show the effect to be causal using a carefully selected subset of auctions from eBay.com a...
 
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