The Power of Collective Insight: Harnessing the Wisdom of the Crowd for Digital Auction Success

Abstract

During the COVID-19 pandemic, online auction markets gained significant importance for their efficient and transparent handling of the shift in economic activity. Renowned digital car auction platform Bring a Trailer (BaT) experienced remarkable growth, with its revenue reaching $828 million in 2020. This study investigates the factors contributing to BaT's success, focusing on the role of its unique community comment feature, which leverages the collective intelligence of its users, known as wisdom of the crowd (WOC) in IS literature. Analyzing a dataset of 13,451 car listings, the study explores how WOC elements such as information quality and user identity impact auction performance. The analysis reveals that helpful WOC content positively influences auction outcomes, reducing information asymmetry and increasing market efficiency. The impact of WOC contributor reputations, however, showed less consistent results. These findings are relevant for stakeholders in the automotive market, providing insights to inform decision-making in online auction markets.