eBay's Crowded Evenings: Competition Neglect in Market Entry Decisions

: Do firms neglect competition when making entry decisions? Using a dataset of 14,973 eBay auctions this paper addresses this question analyzing the time of day at which sellers set their auctions to end. Consistent with competition neglect, it is found that (i) a disproportionate share of auctions end during peak bidding hours, (ii) such hours exhibit lower selling rates and prices, (iii) peak listing is more prevalent among sellers likely to have chosen ending-time strategically, suggesting disproportionate entry is a mistake driven by bounded rationality rather than mindlessness. The results highlight the importance for marketing researchers of assessing rather than assuming the rationality of firm behavior. 

• Type: Journal
• Year: 2010
• Where: MANSCI
• Authors: Uri Simonsohn
• Keywords: Auctions, Entry Decisions, Lower Selling Rates, MANSCI 2010