The Effects of Buyer and Product Traits With Seller Reputation on Price Premiums

[mandy]

This paper examines the effects of buyer and product traits along with seller reputation on price premiums. Three personal traits studied are based on buyers' shopping pattern (analytical vs. impulsive buyers), propensity to trust (trusting vs. skeptical buyers), and attitude toward auction (competitive vs. noncompetitive buyers). Product characteristics - price and homogeneity of quality - are also considered. Data analysis in this study shows that while impulsive buyers consistently pay high premiums, analytical buyers pay greatly different premiums depending on sellers' reputations. However, buyers' propensity to trust and attitudes toward auctions do not significantly contribute to the difference of price premiums when information about sellers' reputations is explicitly provided. Even competitive buyers do not pay higher premiums to sellers of bad reputation for just being a winning bidder. In regard to product characteristics, buyers pay higher premiums for expensive products or products with various options. However, buyers do not pay high premiums for an expensive product with very homogeneous quality.

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