Exploring asymmetrical information transmission processes in online auctions

Abstract

PurposeThe purpose of this paper is to explore whether sellers can create extra profit through information premiums. Phenomena surrounding asymmetrical information transmission among buyers is also explored..Design/methodology/approachThis paper uses three experimental designs to manipulate asymmetrical information acquisition among buyers (including insiders and outsiders) by exploring the related effects in online auctions. Questionnaires are used to collect the final willing‐to‐pay auction prices for buyers in each situation. The analyses are performed with SPSS software, using paired t‐tests and ANCOVA analysis.FindingsInformation premiums between insiders and outsiders are significantly different under diverse manipulative factors. ANCOVA shows a significant relationship in information traits, information acquisition costs, brand signals and information premiums among buyers.Research limitations/implicationsThe paper employs a highly‐involved design and only considers one product category: MP3 players; other types of products are not included.Practical implicationsThe results show that sellers can create extra profit through information traits, information acquired cost, and brand signals; results are from the asymmetrical information transmission process among buyers.Originality/valueThis research is one of the first that attempts to explore the asymmetrical information transmission process and effects among buyers in online auctions.