Topic：Shill Bidding in Online Auctions

Topic：Shill Bidding in Online Auctions

Speaker：Maggie Rong Hu, The City University of New York

Time：Jan. 13, 2025, 13:30-15:00

Venu：Room 106, Zhonghui Building

Introduction to Speaker：Prof. Maggie Rong Hu is currently an Assistant Professor at the W. Newman Department of Real Estate, Zicklin School of Business, Baruch College. Her primary research interests include real estate finance and economics, household finance, FinTech, and empirical corporate finance. Her research has been published in leading journals such as American Economics Review, Management Science, Information Systems Research, Journal of Financial and Quantitative Analysis, Review of Finance, and Real Estate Economics. Her papers have received multiple Best Paper Awards at leading international conferences and have won several competitive research grants. She holds a PhD in Finance and a Bachelor’s degree in Industrial and Systems Engineering from the National University of Singapore.

Abstract：Shill bidding disrupts market integrity and artificially inflates prices in auctions, however, empirical evidence on this practice is limited. In this study, employing a comprehensive dataset of online auctions, we assess the impact of shill bidding on auction outcomes. Our analysis reveals that 2% of participants in our sample are suspected shill bidders, with 8% of auctions involving such activity. Through a matched sample approach, we demonstrate that the presence of shill bidders results in a significant 8.2% increase in price premium. To establish causality, we perform a difference-in-differences analysis, leveraging an online auction regulation as an exogenous shock. We further corroborate our findings using as an instrumental variable for shill bidding intensity. Overall, this study provides causal inference on the impact of shill bidders, underscoring the role of auction fraud in driving price premiums on online platforms.