Bidding behavior and profits in pay-per-bid auctions

This paper studies the bidding behavior and the expected profits in the pay-per-bid auctions. By collecting auction data on bidxi.com, we make the two-step cluster analysis to divide bidders into irrational bidders and rational bidders. It shows that no matter what strategies bidders are used, their expected profits are always negative. Then, we analyze the impact of some factors on the auction price. We find that the number of two types of bidders has the significant positive impact on the final auction price. In addition, we find that in the pay-per-bid auctions, the auction price changes periodically with the end time.