When bargaining meets auctions: assessing the effect of best offer on eBay auctions

In this paper, we apply a recently popularized methodology called ‘matched listings’ to eBay API data to study the effect of enabling eBay’s bargaining feature on auction outcomes. Our results indicate that enabling the bargaining feature increases sale probability by 3.17%. In addition, hypothesis testing indicates this estimate is consistent with eBay’s claim where enabling bargaining increases sale probability by 5%. Finally, we find that enabling bargaining has no impact on transaction price. We provide an innovative evaluation of whether the matched listings methodology works well. We find that this methodology is prone to endogeneity with longer time windows, causing a downward bias when estimating the treatment effect of enabling bargaining.