Virtual Reality, Real Profits: Exploring VR's Influence on Sellers' Revenue and Bidders' Strategic Reactions in Online House Auctions

Virtual reality (VR) is a promising visual technology that may transform the current 2D, static online product presentation into a 3D, interactive approach. Even though VR’s influences have been widely discussed in both industry and academia, there are still few large-scale applications in e-commerce practice. In this study, we conduct empirical analyses on the impact of VR on sellers’ revenue and bidders’ strategic reactions in the context of online house auctions, which differs from prior works regarding product type and sales mode. Estimation results show that VR can increase the final price and benefit sellers by obtaining higher revenue. The positive effect of VR is greater for houses with higher product quality. Additional analyses reveal that VR facilitates buyers to place additional jump bids and reduces the ratio of late bids, both of which contribute to higher revenue. The findings add to both literature and practice.