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INTRODUCTION
Online auctions have become established as a convenient, efficient and effective method of buying and selling merchandise. The largest of the consumer-to-consumer online auction websites is eBay which has over 42 million registered users and was the host of over $59.35 billion worth of goods sold in the year 2007 alone1 in over 18 000 categories, ranging from consumer electronics and collectibles to real estate and cars. Because of the ease of use, the excitement of participating in an auction and the chance of winning the desired item at a low price, the auctions hosted by eBay attract a wide variety of bidders in terms of experience and knowledge concerning the item for auction. Indeed, even for standard items like personal digital assistants (PDAs) we have observed a large variance in the selling price, which illustrates the uncertainty one faces when bidding.
eBay auctions have a finite duration (3, 5, 7 or 10 days). The data available to bidders during the duration of the auction include: the items description, the number of bids, the ID of all the bidders and the time of their bid, but not the amount of their bid (this becomes available after the auction has ended), the ID of the current highest bidder, the time remaining until the end of the auction, whether or not the reserve price has been met, the starting price of the auction and the second highest price of the item, referred to as the listed price. The auction ends when time has expired, and the item goes to the highest bidder at a price equal to a small increment above the second highest bid.
As of June 2008, eBay publishes on the web the bidding history of all of the auctions completed through its website from the past 30 days. The bidding history includes the starting and ending time of the auction, the amount of the minimum opening bid set by the seller, the price for which the item was sold and, apart from the winning bid of the auction, the amount of every bid, and when and by whom it was submitted. For the winning bid of the auction only the identity of the bidder and submission date are revealed. In addition, if...