Snipe Bidding Behavior in Ebay Auctions

Our research investigates what factors make snipe bidding more likely, whether sniping pays, and how an auction can be designed to minimize sniping. We estimate sniping probability in eBay auctions using multivariate models to examine novel datasets compiled from auctions of the Norelco electric razor and the Sony PlayStation2. Our main results reveal that the winner of an auction is more likely to be a snipe bidder and that a lower ending price increases the likelihood that the winner of an auction is a snipe bidder, everything else held constant. We find that experienced bidders are more likely to engage in sniping behavior. In addition, we find that an auction designer or a seller can discourage snipe bidding by setting a longer duration and/or a lower (or no) reserve price