C2C versus B2C: A comparison of the winner's curse in two types of electronic auctions

Abstract

Researchers studying on-line auction venues have focused on the business-to-consumer (B2C) auction and overlooked consumer-to-consumer (C2C) auctions. Since these two venues differ significantly in consumer type and auction rules, they are expected to generate different levels of consumer surplus. This paper explores the extent to which consumers in each type of auction experience the winner's curse-that is, pay more than the minimum fixed price for identical products. The paper also examines how product value, information asymmetry, and type of auction affect the occurrence of the winner's curse.