Internet auctions attract numerous agents, but only a few become active bidders. Under the Independent Private Values Paradigm the valuations of the active bidders form a specific record sequence. This record sequence implies that if the number n of potential bidders is large, the number of active bidders is approximately 2log. n, potentially explaining the relative inactivity. Moreover, if the arrival of potential bidders forms a non-homogeneous Poisson process due to a time preference for auctions that are soon to close, then the arrival process of the active bidders is approximately a Poisson arrival process.

, ,
doi.org/10.1016/j.jet.2013.04.017, hdl.handle.net/1765/40955
Journal of Economic Theory
Erasmus School of Economics

de Haan, L., de Vries, C., & Zhou, C. (2013). The number of active bidders in internet auctions. Journal of Economic Theory, 148(4), 1726–1736. doi:10.1016/j.jet.2013.04.017