"The fox knows many things, but the hedgehog knows one big thing."


Glenn Reynolds:

Barack Obama:
"Impossible to transcend."

Albert A. Gore, Jr.:
"An incontinent brute."

Rev. Jeremiah Wright:
"God damn the Gentleman Farmer."

Friends of GF's Sons:
"Is that really your dad?"

Kickball Girl:
"Keeping 'em alive until 7:45."

Hired Hand:
"I think . . . we forgot the pheasant."

I'm an
Alcoholic Yeti
in the
TTLB Ecosystem

Tuesday, June 07, 2011

What Would You Pay For a $10 Amazon Gift Certificate?

That seems like a simple question, and I even know that some of you smarty-pants types would argue (correctly) that the value of such a thing is a bit less than $10. After all, you can spend a ten-dollar bill anywhere, but you can only use the gift certificate in one place.

But no rational person would pay more than ten bucks for the thing, right?

Not so fast.

Matthew T. Jones is a Ph.D. candidate at The Ohio State University. He's studied eBay auctions of Amazon gift certificates and, being an academic, has written a paper titled "Bidding Fever in eBay Auctions of Amazon.com Gift Certificates." Here's the abstract of his paper:
In a data set of eBay auctions of Amazon.com gift certificates, 41.1% of the winning prices are found to exceed face value. Because certificates can be obtained directly from Amazon.com at face value, this value is an observable upper bound for rational bidding. Alternative interpretations to bidding fever are explored.
That is to say: while anyone can go to Amazon and buy a $10 gift certificate for . . . $10, not only do some people instead buy them via eBay auctions, but 41% are purchased there for more than $10.

Alas, the data is not broken out by political party affiliation.


Comments on "What Would You Pay For a $10 Amazon Gift Certificate?"


Anonymous Uncle M said ... (11:00 AM) : 

There is another possible explanation. Items purchased on eBay are, most often, paid via PayPal. An individual selling items on eBay and receiving payment to his/her PayPal account will accumulate money/PayPal credits in his/her PayPal account which can be used to purchase items on eBay and elsewhere. All of this can be accomplished without a credit card. Hence, those without credit or credit cards can purchase items, including Amazon gift certificates, without a credit card ... something they would not otherwise be able to do on the Amazon site until recently. (See below.) I suspect that the premium noted by our Ph.D. candidate is quite small, but enough to account for a competitive market for non-credit-worthy potential purchasers of $10 Amazon gift certificates on eBay. Amazon has recently instituted a purchase-for-cash gift-certificate program with "no fees," but that would require that the buyer remove his/her bunny slippers, great the light of day and appear in public. Hence, the premium.


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