Title：Shill Bidding in Online Auctions

Speaker：Maggie Rong Hu, CUNY

Time：2025/1/13 13:30-15:00

Venue：106 Zhonghui Building

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 juridical housing auctions in China, 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 housing auction regulation implemented by the Jiangsu High Court in September 2017 as an exogenous shock. We further corroborate our findings using the number of dishonest judgment debtors in a city 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.