During the Christmas holidays, being asked to get around on our beautiful roads of France to enjoy the various feasts usual in this period (called the truce confectioners, but the said confectionery is far from being a period of peace I think), I saw firsthand how the French fleet was renewed. Indeed, luck probably pretty rare, time of the scrapping incentive introduced by the French government has coincided with a change in the registration system cars, first priority applied to new vehicles. This enables consumers to easily see the explosion in the number of new vehicles in the park, the new plates replacing the old high speed
In France, the end of the scrappage caused the stampede at dealerships. Apparently, car dealers have been totally overrun with customers eager to buy a new vehicle through the resumption of their old jalopy, that before the fateful date of 31 December. Dealers, says the newspaper Le Monde , have seen increased orders by 30% over the same period of 2009, a total of 370,000 vehicles have been ordered. This is reminiscent of this mediocre film starring Arnold "Gobernator" Schwarzenegger a few years ago, the "Jingle" in which two fathers not very farsighted, even a little outrageous, and have promised their respective son the same toy in vogue, are competing to get the day of the December 24 one of the last copies available for sale. Self
Incidentally, I fail to see the positive impact of this price premium paid by the customer for a vehicle from the time of this deadline results in an increase apparently very strong demand, which puts the seller in a strong position. Moreover, the simple consequence of this is probably a drop in demand after 1 January, what dealers expect. I hope that a serious economist will have the idea of studying this closely, but my hunch would be that those who waited to buy their vehicle will be in an interesting position by February in March 2011 to negotiate volume discounts with vendors after a few weeks of concessions deserted by customers sated in their primary needs automobilistiques. The rest of the ticket will show that this intuition is not completely off base.
Incidentally, I fail to see the positive impact of this price premium paid by the customer for a vehicle from the time of this deadline results in an increase apparently very strong demand, which puts the seller in a strong position. Moreover, the simple consequence of this is probably a drop in demand after 1 January, what dealers expect. I hope that a serious economist will have the idea of studying this closely, but my hunch would be that those who waited to buy their vehicle will be in an interesting position by February in March 2011 to negotiate volume discounts with vendors after a few weeks of concessions deserted by customers sated in their primary needs automobilistiques. The rest of the ticket will show that this intuition is not completely off base.
In Spain, the end of the baby bonus of 2,500 euros on 1 January 2011, introduced in 2007 by the Zapatero government, caused a similar race, but this time for childbirth parents urging medical personnel to help induce labor. Clinics and hospitals were swamped as ever this Christmas, just like the French auto dealers mentioned above.
Economist Has something to say about these behaviors caused by race dates irrevocable? From a general standpoint, I do not know, but from the perspective of behavioral economics certainly.
[ At best, reader, I say a general point of view, to do a bit of provocation at the beginning of the year, it always amuses me to see how many people are a more rational economic point of view that many academic economists are willing to acknowledge. I remember the critical final approach Becker Economic Analysis behaviors that have nothing, not really anything economic, such as marriage, substance abuse, crime ... and the birth rate. So, Gary, respect! ]
Regarding experimental economics, this kind of problem has been studied in the context of auctions, which is easily understood, since the bidders competing for the same property may be ready to overbid to win, the deadline approaching end of the auction, putting themselves at risk of well-known curse of the winner (I will not longer here, if this problem interests you, reader, I refer you to this post and the Friends of Mafeco ).
He who, from time to time as me, bidding on E-Bay and was led to propose a price beyond its initial threshold at the sight of the clock down mercilessly the remaining time, I understand very well.
course, a skeptical reader objected that the problem is quite different since, for vehicles, the price is fixed in advance and that competition among buyers is not regulated by a price system, as in the auction , but by a system queue. However, this objection I reply that I am to myself that the potential size of the refund, so the final price of the vehicle depends on the willingness to pay of the buyer, which I think is enhanced by the premium case.
He who, from time to time as me, bidding on E-Bay and was led to propose a price beyond its initial threshold at the sight of the clock down mercilessly the remaining time, I understand very well.
course, a skeptical reader objected that the problem is quite different since, for vehicles, the price is fixed in advance and that competition among buyers is not regulated by a price system, as in the auction , but by a system queue. However, this objection I reply that I am to myself that the potential size of the refund, so the final price of the vehicle depends on the willingness to pay of the buyer, which I think is enhanced by the premium case.
The impact of the rules of time limits on the behavior of bidders, the net has been particularly studied in a series of articles by Alvin Roth & Axel Ockenfels (2002, 2006) and (Dan) Ariely, Ockenfels and Roth in 2005. These papers are both theoretical and empirical, empirical evidence is based on either laboratory experiments or on data from Internet auctions (Ebay and Amazon).
They look especially to study the behavior of bidders in a second bid price (that is to say when the buyer who wins is the one who proposed the highest price but ultimately pays the price offered by the next lower losing the first buyer, also called Vickrey auction), and this by changing the rules of auction end. In a first institution
auction, similar to E-Bay auction ends on a firm date specified in advance, usually after a week and known to all. The bidders offer their maximum price sequentially, it is not known to other bidders, but helping to increase the price by one increment, for example, 1 dollar, if the maximum price proposed is higher than the lowest price offered so far. An example, taken from Wilcox, 2000, in an article published in Marketing Letters, may be more telling. In this example, the first bidder offers a price of $ 20, knowing that the seller required a reserve price of $ 10, the second bidder offers $ 15, $ 30 the third, etc. :
They look especially to study the behavior of bidders in a second bid price (that is to say when the buyer who wins is the one who proposed the highest price but ultimately pays the price offered by the next lower losing the first buyer, also called Vickrey auction), and this by changing the rules of auction end. In a first institution
auction, similar to E-Bay auction ends on a firm date specified in advance, usually after a week and known to all. The bidders offer their maximum price sequentially, it is not known to other bidders, but helping to increase the price by one increment, for example, 1 dollar, if the maximum price proposed is higher than the lowest price offered so far. An example, taken from Wilcox, 2000, in an article published in Marketing Letters, may be more telling. In this example, the first bidder offers a price of $ 20, knowing that the seller required a reserve price of $ 10, the second bidder offers $ 15, $ 30 the third, etc. :
Source: Wilcox, 2000
In the example above, the No. 3 bidder wins the auction and pays $ 26 after the regulatory end of the auction process.
Now it happens that the auction system to e-Bay auction causes a lot of last minute. From a factual standpoint, we observe that 80% of the auction conducted on E-Bay are made during the last hour before the end of the auction regulations. These behaviors bidding the last minute, well known, are called "sniping." The risk of this behavior is that if there is an auction at the last minute, there is a small but significant probability that the offer can not be taken into account with E-Bay, which is the result of congestion deals the system can not handle if they are too numerous.
Moreover, other rules of auction end can be imagined, as in the Amazon system. In this system, the deadline is extended to advance automatically, unless during the last ten minutes before the deadline, no bid was made. We understand intuitively that this system discourages buyers with offers at the last minute.
On Empirically, this intuition is confirmed. The chart below shows the cumulative distribution of bids on the hour before the deadline, for Amazon and eBay:
Now it happens that the auction system to e-Bay auction causes a lot of last minute. From a factual standpoint, we observe that 80% of the auction conducted on E-Bay are made during the last hour before the end of the auction regulations. These behaviors bidding the last minute, well known, are called "sniping." The risk of this behavior is that if there is an auction at the last minute, there is a small but significant probability that the offer can not be taken into account with E-Bay, which is the result of congestion deals the system can not handle if they are too numerous.
Moreover, other rules of auction end can be imagined, as in the Amazon system. In this system, the deadline is extended to advance automatically, unless during the last ten minutes before the deadline, no bid was made. We understand intuitively that this system discourages buyers with offers at the last minute.
On Empirically, this intuition is confirmed. The chart below shows the cumulative distribution of bids on the hour before the deadline, for Amazon and eBay:
Source: Ockenfels and Roth 2002, American Economic Review
curves that are more uniform than on Amazon, while we see that for eBay, more than half of tenders the last time are made in the last 15 minutes.
This empirical study is complemented by a series of laboratory experiments in which the authors compare four designs for auction. The experiences of bidding a basic principle quite simple. Typically, subjects are assigned a random value between minimum and maximum terminal, this value is their own and actually representing their willingness to pay. The subject will therefore gain is zero if he loses the auction is the difference between this value and the final price if the winner of the auction. This is exactly so that the experiments Ariely, Ockenfels and Roth are organized. In their experiments
, there are four treatments that will be compared. The design is quite complex, I leave interested readers to go read the paper as published in the Rand Journal of Economics. The first treatment, which treatment benchmark, is simultaneous sealed bid second price (all bidders make their offers at the same time, their offer is not known to others and the winner is the one who made the strongest proposal paying the second highest price). The second is the Amazon system, a time of bid is given to subjects, and the auction stops only if no one made any proposal for 10 minutes. It is also a second-price auction. The third and fourth correspond to the eBay system, with a deadline of all known and irrevocable, eBay is also equivalent to a second bid price. The third treatment simply consider the fact that if the offer is made at the last minute, there are only 80% chance that it be considered, while in the fourth treatment, there is a 100% chance that it is actually transmitted (so there is no failure of the type considered above). The results are very rich, but compared to my original question on the end of the scrapping, I'll put a special emphasis on the final income of the winners of the auction, is to tell the difference from baseline for each subject privately and the price he actually paid.
source: Ariely, Ockenfels and Roth, 2005
It is quite clear that the median income earned by the winning buyer is more important in the treatment than in treatments Amazon eBay themselves being best in terms of the buyer that classic second-price auction Sealed. Clearly, an empirical perspective, we see that to establish a deadline irrevocable mainly benefits the seller.
Moral: Beware of deadlines that make you throw you in the act of purchase, because quite often there is more to lose than to win!
that, I wish you, dear reader, an excellent year 2011 and hope to see you continue on this blog that just celebrated its two year existence at the end of the year last! Anyway, thank you for your faithfulness.
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