Pop Music and Internet Auctions. (NSC98~) 2014/10/18, 中正大學經濟系 Chia-Hung Sun Department of Economics, National Chung Cheng University. Outline. Introduction Data sources and summary statistics Empirical models Least squares regression, Censored normal regression - PowerPoint PPT Presentation
Cross Bidding in Internet Auctions:
Pop Music and Internet Auctions(NSC98~)
Chia-Hung Sun Department of Economics, National Chung Cheng University 1OutlineIntroduction Data sources and summary statisticsEmpirical models Least squares regression,Censored normal regression Quantile regression Censored quantile regression Estimation results Conclusions (not ready)2IntroductionAn examination of the value of seller reputation forms the basis for empirical tests of asymmetric information in recent empirical papers; for example, see McDonald and Slawson (2002, seemingly un-related regression), Dewan and Hsu (2004, OLS, probit, Tobit), Dewally and Ederington (2006, Tobit, Heckman's sample selection, probit), Lucking-Reiley, Bryan, Prasad, and Reeves (2007, censored normal regression), Livingston (2010, OLS, probit) Hendricks et al. (2012, OLS, 2SLS) 3How about memorabilia? Ursprung and Wiermann (2011) the death effect is indeed negative for artists who are dying young Reputation effect diminishes with increasing age at death, with the consequence that the traditional positive scarcity effect governs the price changes observed after the death of artists who die at a ripe age after having gained the reputation which they deserve the work of top-artists is subject to more pronounced death effects than the work of merely accomplished artists, and the work of journeymen artists is even less affected 4 Matheson and Baade (2004) that the price of celebrity memorabilia rises around the time of that persons death. Previous authors attribute this death-effect primarily to expectations on the part of collectors concerning the future supply of collectibles about the public figure as in the case of a durable goods monopolist Our observations of the sports memorabilia market suggest that the increase in prices is instead due to a nostalgia effect () as a result of the media attention that surrounds the death of a prominent public figure 5Questions proposedfans were eagerly looking for his memorabilia in online auctions and prepared to pay for whatever they could afford, sellers reputation still matter? Is there a death effect in online auctions? How does death effect vary across different price quanitles?
6Related literature (2010-2011)Author(s)Items/mean pricesObservations/ MethodsLewis (2011) 18 models of vehicle/ $11,11082538/ IV, OLS, hedonic regressionsSimonsohn (2010) Single & multiple DVDs/ $10.16 & $55.9211,796 & 3,177/ probit, Tobit & OLSCabral & Hortacsu (2010)IBM Thinkpad/ , collectible coins(gold & proof) & babies/$580, $50, $70 & $10.71053/ OLS (panel data)Trautmann & Traxler (2010) Football Players at Hattrick/-364/ OLS & censored normal regressionHammond (2010) Compact discs/$10.745009/ OLSLivingston (2010) Taylor Made Firesole Irons & HALO video game/$393.31 & $22.974377 & 4394/ OLS7 Author(s)Items/mean pricesObservations/ MethodsElfenbein & McManus (2010)charity auctions & non-charity auctions/$76.45 & $78.257654 & 18347/ OLS & probitMaier (2010) 16 items/ $8.04 ~ $613.26 5,648; 10,580/ GLSSun (2010) Cherry fruits125/ OLS, censored normal regression8Data sourcesItem of interest: five studio albums of vinyl long play records (vinyl) by Michael Jackson (August 29, 1958 June 25, 2009); these are bad, thriller, off the wall, dangerous and historythe quote from Wikipedia states: Michael Joseph Jackson was an American singer-songwriter, entertainer, dancer, arranger, music producer, choreographer, actor, businessman, musician, and philanthropist. Often referred to as the King of Pop, or by his initials MJ Jackson is recognized as the most successful entertainer of all time by Guinness World Records 9Data sourcesthese vinyl records to some extent can be considered as collectables, irrespective of used or brand new; bidders pay close attention to the information provided, including sellers reputation, descriptions or even picturesthe relatively homogeneous nature of the music records allows for the analysis10 collected by hand from eBay Australia the overall sample period was 88 days starting from 8 July 2009 to 4 October 2009 (two weeks cooling period after Michael Jackson pass away)total sample size is 577, 360 successful auctions217 auctions with no bids or below reserved priceexcluded: 11 auctions with incorrect descriptionsOn July 8th, there were 76 music records of Michael Jackson, but only 13 of them were vinyl11Cooling period? Jackson's Thriller: $1,225 on eBay, $4.99 in SeattleMichael Jackson hadnt been pronounced dead yet Thursday when the first person walked into Golden Oldies wanting a copy of Thriller. The longtime Wallingford record and music store had 55 copies on vinyl, selling for $4.99. All were gone within two days. About two dozen vinyl copies of Off the Wall went for $3.99.Owner Dean Silverstone, who I wrote about in a 2007 business profile, said hes heard stories of Thriller selling for $60, and unopened copies selling for $1,200. But he says it shouldnt be sold for more than $5. 12 13
Definitions of variables pricewinning bid (second highest plus one increment) bidsnumber of bidsbin (Buy It Now)dummy variable = 1, if an auction ended with 'Buy It Now'; = 0, otherwise win dummy variable = 1, if an item is sold; = 0, otherwisescore positive scores minus negative scores negative negative scores received in a monthnegdummydummy = 1, if seller received negative score in a month; = 0, otherwise sellerpurchasedummy = 1, if seller has ever purchased an item on eBay; =0, otherwise newdummy variable = 1, if an album is brand new, mint or never played; = 0, otherwise offthewalldummy variable = 1, if an album is 'Off the wall'; = 0, otherwisethrillerdummy variable = 1, if an album is 'Thriller'; = 0, otherwisebaddummy variable = 1, if an album is 'Bad'; = 0, otherwisedangerousdummy variable = 1, if an album is 'Dangerous'; = 0, otherwisehistorydummy variable = 1, if an album is 'History'; = 0, otherwisebonusdummy variable = 1, if a bonus (poster, signature or single vinyl) is provided; = 0, otherwise picdiscdummy variable = 1, if an album is 'picture disc'; = 0, otherwise14quantityQuantity available for sale in a listing overseasdummy variable = 1, if the item is available for international shipping; =0, otherwisedaysNumber of days: an auction listed after the death of Michael Jackson questionnumber of questions (raised by bidders) answered openingan opening bid set by sellersshippingCost of handling and shipping weekenddummy variable = 1, if an auction ends on Saturday or Sunday; = 0, otherwise creditcarddummy variable = 1, if credit card payment is available; = 0, otherwisepicsnumber of pictures displayed on the webpagebscorebuyer's scores (positive scores minus negative scores) 15Summary statisticsthe album thriller had the largest number of observations (377/577 = 65%) and with a relatively low average price of AUD$ 46.1. The rareness of the two albums also reflected in the number of bids received because the dangerous album, had the highest number of bids of 19.42, followed by 17.17 of the history album. The sellers for the history album had the highest average score of 2531.5, in contrast to the dangerous album with the lowest score of 769.8 on average. The seller with the highest score had 16,476, but there were several zero reputation sellers who successfully sold their albums except for sellers in the dangerous album. 16Summary statisticsOf the 360 successful auctions, the average price was $55.23 Australian dollars (AUD)the exchange rate for Australian dollar against U.S. dollar fluctuated substantially ranging from 0.7745 to 0.8801 in three-month period, and the average exchange rate was 0.8367. The highest price of vinyl records was one of the dangerous albums recorded at AUD$ 510 and the lowest price was just for AUD$ 0.99. The history album had the highest average price of AUD$ 231.6, followed by the dangerous album of AUD$ 227.2. The main reason for such high prices was the rareness of these two albums. They were recorded in 1995 and 1991the average score for overall sellers was 1052, the negative score on average was as low as 0.07 17The mean opening bid in successful auctions was AUD$ 23.4, including the highest and lowest opening bids of AUD$ 250 (thriller) and $ 0.01. In contrast, the average opening bid in the overall sample was AUD$ 49.3, which indicates many auctions with a relatively high opening price did not attract any bids. There were 24 auctions with an opening bid greater than AUD$ 250 (ranging from AUD$ 299 to 1500), but all of them were unsold. The used vinyl records accounted for nearly 81% of total sales, and more than 90% of the sellers have ever purchased items on eBay, indicated by variable, sellerpurchase 18 Picture disc vinyl records had only about 8.8% of the auctions. In terms of payment methods, the use of credit cards was unpopular at the time on eBay Australia, accounting for less than 2%. the success rates of auctions for these five albums differ, from the lowest rate of 40.0% (history) to the highest rate of 76.67% (off the wall). 19 20
Empirical modelsOLS regression Table 4 Censored normal regression Table 4Quantile regression Table 5 (plus figure 4) Censored quantile regression Table 6 (plus figures 5 & 6) 21Estimation results (OLS)this study includes four dummies in the regression except for the thriller albumit shows that an additional bid increase the auction price by AUD $2.947 Auctions ended with buy it now do not generate a significant price increase. Surprisingly, seller reputations (both positive and negative scores) no statistically significant impact on pricesbrand new (new) vinyl records on average are statistically and significantly sold at higher price of AUD$ 52.53 22Estimation results (OLS)the prices of the dangerous and history albums are considerably affected by fewer quantity su