CONSUMER BEHAVIOR IN ONLINE AUCTIONS: AN EXAMINATION OF PARTITIONED PRICES ON EBAY

eBay is one of the most successful consumer-related online auction sites. This paper describes a field study to determine the effects of partitioned prices-that is, separate item costs and shipping charges-on the winning bids submitted by consumers on this site. Consumers appear to be subject to an anchoring and adjustment heuristic that leads many to ignore the less-salient shipping costs when bidding. Even experienced bidders exhibit these effects. This behavior is particularly striking in an environment where sellers set variable shipping costs. The results have implications for consumers and sellers on eBay and similar online auction sites that allow sellers to set their own prices for shipping and other ancillary costs. Retailers conducting auctions on other Web sites should find the results useful as well.