Contents

1. The role of interpersonal information in electronic commerce:The case of Internet auctions Avi NoyThe Graduate School of Business AdministrationUniversity of Haifahttp://research.haifa.ac.il/~avinoy/ avinoy@gsb.haifa.ac.il

2. Contents • Information and interaction in electronic commerce • Internet auctions • A study of interpersonal information in auctions (Supervised by Prof. Sheizaf Rafaeli)

3. Information and interaction in electronic commerce Our focus is this study id on the consumer in B2C and C2C • What type of information is consumed • Product related, Seller related (and 3rd party sites), … • Sources of information • Public / Interpersonal information (real vs. virtual), Advertisements, Other sites,… • Direction of the information • One way / Two ways • Type of communication • Textual, Graphical, audio, video, synchronous/Asynchronous

4. Related topics • Human Computer Interaction • Autonomous agents Current research Interpersonal Influence Computer- Mediated Communication Consumer Behavior How are these issues related ? Virtual Presence Internet Auctions

5. Characters (VHost) – OddCast Human click’s interactive salesman BuddySpace Information and interaction in electronic commerce • How to represent an interaction?

6. Information and interaction in electronic commerce • OddCast • Banners that said, “Chat online with an expert” with a gif of a smiling service vs. [V]Host™ character saying, “Hi, I’m a customer service agent. Click here for live help.” Generated 150% improvement in click through rate to chat • Users create [V]Hosts and email them to friends as part of a contest for the awards night. 62% of unique visitors converted into registrants • Promoting website as alternative to traditional mailing to lower customer service costs and postal fees. With no advertising or change in their search engine status, Merit put a [V]Host™ on their website. Sustained lift of 200% in traffic

7. Bubble - IBM Radar- Odigo Interaction map Information and interaction in electronic commerce • How to represent an interaction and awareness?

8. Chat Circles – MIT Media Lab Crowd – MIT Media Lab FootPrint – MIT Media Lab Information and interaction in electronic commerce • How to represent an interaction and awareness?

9. Information and interaction in electronic commerce • Interpersonal information ? – Store rating, opinions

10. Information and interaction in electronic commerce • Interpersonal information in Internet auctions • Forums / Chats • Seller/Buyer reputation systems

11. Determinants of bidding behavior in Internet Auctions The Bidder perceived risk, independent estimates, experience, information , enjoyment • Where to buy • What item • Bidding strategy • Bidding proxy • How much to bid • When to bid • How many bids Auction mechanism and rules auction type, ending rules, reserved price, proxy bidding The Item Independent private value/Common value Means of item evaluation Bidding behavior The Seller Reputation (self/site) Other bidders and other social factors herding, Precedingbehavior

12. Social influence in Internet auctions Pre-Auction Phase Bidding Phase Post-Auction Phase Auction related factors (Auction type and rules) Evaluation Of auction results • Information • Item • Auction site • Seller Bidder related factors (Risk, Experience, Enjoyment) Changing factors (Item evaluation, Recent information) On Going Decisions Post-Auction Decisions Preliminary Decisions Seller related factors (Reputation) Social Influence Virtual, Real Social Influence Virtual, Real Other bidders related factors (Preceding behavior, Evaluation ) Other social factors (Friends, Family)

13. Theoretical background of the study • Normative vs. Informational influence • According to normative influence, judgment shifts result from exposure to others’ choice preferences and subsequent conformity to the implicit or explicit norms in these preferences. • Informational influence attributes shifts to the incorporation of relevant arguments or information about the issue that are shared between discussants (Kaplan, 1987) • Related theories • Influence in CMC groups • Social presence theory • Media Richness theory • Auction economics research

14. Research questions • Can the social environment that is part of traditional auctions be replicated in Internet auctions, and how? • How does other bidder influence bidding behavior? • What are the influencing components of interpersonal interaction in auctions? • How does bidding behavior affected by different auction models?

15. Research framework • Core simulation • Auction site • Interpersonal information components • Bidding agents • Implemented in Java • Input parameters - control setup and behavior • Output parameters – data collected during the auction • Simulation framework • Client - Web pages, Forms, Java scripts • Server - Perl/CGI scripts • Experimental procedure • Different auction models • Manipulation of the level of interpersonal information

16. Typical eBay auction

17. English Auction

18. Dutch Auction

19. Results – English auction 580 6 560 Number of bids Of a winner Win Bid Number of bids 5 540 4 520 Bids 3 500 Number of bids High Bid 2 480 1 460 0 440 HI Participants HI Participants LI Participants LI Participants

20. Results – English auction 100% % Continue 90% 80% 70% % Wins 60% 50% 40% 30% 20% HI Participants LI Participants

21. Results – Dutch auction 100% % Continue 620 90% 600 % Wins 80% 580 70% Win Bid 560 Bids 60% 540 50% 520 40% 500 30% 480 20% HI Participants HI Participants LI Participants LI Participants

22. Future research and availability • Interpersonal information in e-commerce • Online Stores • Online games • Online casinos • Web mining – recommendations based bidding patterns • Autonomous agents • A demo version of the simulations is available at: http://research.haifa.ac.il/~avinoy/auction/ • Simulations can be operated in class or at home • Contact: avinoy@gsb.haifa.ac.il Thank You !