The economic literature on online auctions is rapidly growing because of the enormous amount of freely available field data. Moreover, numerous innovations in auction-design features on platforms such as eBay have created excellent research opportunities. In this article, we survey the theoretical, empirical, and experimental research on bidder strategies (including the timing of bids and winner's-curse effects) and seller strategies (including reserve-price policies and the use of buy-now options) in online auctions, as well as some of the literature dealing with online-auction design (including stopping rules and multi-object pricing rules).
This paper has been prepared as a draft chapter for the Handbook of Economics and Information Systems, Terrence Hendershott, ed., Elsevier Science, 2006. We thank David Caballero and Jason McCoy for their research assistance. Axel Ockenfels gratefully acknowledges support from the German Science Foundation (DFG). David Reiley gratefully acknowledges support from NSF grant SES-0094800. The views expressed herein are those of the author(s) and do not necessarily reflect the views of the National Bureau of Economic Research.