In second price Internet auctions with a fixed end time, such as those on eBay, many bidders submit their bids in the closing minutes or seconds of an auction. We propose an internet auction model, in which very late bids have a positive probability of not being successfully submitted, and show that late bidding in a fixed deadline auction can occur at equilibrium in auctions both with private values and with uncertain, dependent values. Late bidding may also arise out of equilibrium, as a best reply to incremental bidding. However, the strategic advantages of late bidding are severely attenuated in auctions that apply an automatic extension rule such as auctions conducted on Amazon. Field data show that there is more late bidding on eBay than on Amazon, and this difference grows with experience. We also study the incidence of multiple bidding, and its relation to late bidding.
Late and multiple bidding in second price Internet auctions: Theory and evidence concerning different rules for ending an auction
Published 2006 in Games Econ. Behav.
ABSTRACT
PUBLICATION RECORD
- Publication year
2006
- Venue
Games Econ. Behav.
- Publication date
2006-05-01
- Fields of study
Business, Computer Science, Economics
- Identifiers
- External record
- Source metadata
Semantic Scholar
CITATION MAP
EXTRACTION MAP
CLAIMS
CONCEPTS
- amazon
The auction platform with an automatic extension rule used as the comparison site in the field evidence.
- automatic extension rule
An auction-ending rule that extends the closing time when bids arrive near the deadline.
Aliases: anti-sniping rule, extension rule
- bidder experience
The amount of prior auction participation or familiarity a bidder has accumulated.
Aliases: experience
- dependent values
A valuation setting in which bidders' values are related to information held by other bidders or by the state of the world.
Aliases: common-dependent values, uncertain dependent values
- ebay
The fixed-deadline auction platform used as one of the field-data comparison sites.
- fixed deadline auction
An auction format that ends at a predetermined time without extending the closing time.
Aliases: fixed end time auction, fixed end-time auction, fixed deadline
- incremental bidding
A bidding pattern in which participants raise bids gradually over time rather than waiting until the end.
Aliases: stepwise bidding, gradual bidding
- late bidding
Bidding behavior in which a bid is submitted very close to the scheduled end of an auction.
Aliases: sniping
- multiple bidding
The practice of placing more than one bid during the same auction.
Aliases: repeated bidding
- private values
A valuation setting in which each bidder's value for the item depends only on their own information.
Aliases: private-value setting
REFERENCES
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