Abstract
Do firms neglect competition when making entry decisions? This paper addresses this question analyzing the time of day at which eBay sellers set their auctions to end. Consistent with competition neglect, it is found that (i) a disproportionate share of auctions end during peak bidding hours, (ii) such hours exhibit lower selling rates and prices, and (iii) peak listing is more prevalent among sellers likely to have chosen ending time strategically, suggesting disproportionate entry is a mistake driven by bounded rationality rather than mindlessness. The results highlight the importance for marketing researchers of assessing rather than assuming the rationality of firm behavior.
Original language | English |
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Pages (from-to) | 1060-1073 |
Number of pages | 14 |
Journal | Management Science |
Volume | 56 |
Issue number | 7 |
DOIs | |
Publication status | Published - Jul 2010 |
Externally published | Yes |
Keywords
- Behavioral economics
- Competitive strategy
- Market entry
- Marketing