MIS Quarterly, 2004, Volume 28,
Issue 1, Page 21-43.
While traditional information systems research emphasizes understanding of end users from perspectives such as cognitive fit and technology acceptance, it fails to consider the economic dimensions of their interactions with a system. When viewed as economic agents who participate in electronic markets, it is easy to see that users™ preferences, behaviors, personalities, and ultimately their economic welfare are intricately linked to the design of information systems. We use a data-driven, inductive approach to develop a taxonomy of bidding behavior in online auctions. Our analysis indicates significant heterogeneity exists in the user base of these representative electronic markets. Using online auction data from 1999 and 2000, we find a stable taxonomy of bidder behavior containing five types of bidding strategies. Bidders pursue different bidding strategies that, in aggregate, realize different winning likelihoods and consumer surplus. We find that technological evolution has an impact on bidders™ strategies. We demonstrate how the taxonomy of bidder behavior can be used to enhance the design of some types of information systems. These enhancements include developing usercentric bidding agents, inferring bidders™ underlying valuations to facilitate real-time auction calibration, and creating low-risk computational platforms for decision making.
Keywords: bidding strategies; calibration; Electronic markets; online auctions; simulation; smart agents; user behavior taxonomy; valuation discovery