Online Mystery Auctions: A Psychological Contract Violation (PCV) Perspective

• In Event: XBRL and E-commerce

Abstract

Online mystery auctions (MAs) are vaguely specified, unregulated lotteries or raffles. In three studies, this paper extends psychological contract violation (PCV) theory to a new domain (MAs) and presents evidence regarding the extent of buyer risk and PCV rates among MA sellers and listings. Study 1 establishes the characteristics of the supply of MA, by comparing eBay MA sellers (n = 965) with a random sample of non-MA sellers (n = 474); MA sellers’ evidence higher risk and rates of PCV compared with the random sample. Study 2 compares transaction outcomes and buyer characteristics, i.e., MA demand, in three samples: (a) “mystery” (n = 3,352), (b) “non-mystery” listings of sellers who also list MAs (n = 13,449), and, (c) a random sample of eBay listings (n = 16,097); results indicate lower rates of consumer satisfaction, and more purchases by inexperienced buyers, for MA listings. Study 3 examines the frequency of “reputable” MAs; results indicate that three MA seller traits, the: (1) quality and (2) quantity of reputation feedback and (3) a non-US seller registration, predict better seller performance. However, on average, MAs pose a high likelihood of PCV; fewer than 2% of MA sellers achieve performance metrics comparable to the average eBay seller. Taken as a whole, the results suggest that: (1) MAs are high risk, low return “opportunities” for potential buyers, (2) PCV theory helps explain behavior even with high risk products, such as MAs.

Authors

• Alexey Nikitkov, Brock University

• Dan Stone, University of Kentucky