Jump bidding and overconcentration in decentralized simultaneous ascending auctions

A model of English auctions is proposed to incorporate the possibility of jump bidding. When two objects are sold separately via such auctions, bidders signal their willingness to pay via jump bids, thereby forming rational expectations of the prices without relying on any central mediator. Hence a...

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Bibliographic Details
Published in:Games and economic behavior 2012-11, Vol.76 (2), p.648-664
Main Author: Zheng, Charles Z.
Format: Article
Language:English
Subjects:
Auction
Auctions
Bidders
Bidding
Bids
Complementarity
Exposure problem
Multiple object auctions
Ombudsman
Prices
Rational expectations
Simultaneous auctions
Studies
Synergy
Threshold problem
Uncertainty
Willingness to pay
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Summary:A model of English auctions is proposed to incorporate the possibility of jump bidding. When two objects are sold separately via such auctions, bidders signal their willingness to pay via jump bids, thereby forming rational expectations of the prices without relying on any central mediator. Hence a multi-item bidder does not suffer the exposure problem of having to buy an item while he is uncertain about the price of its complement. Single-item bidders, however, free-ride one another in competing against a multi-item bidder. Consequently, the auctions overly concentrate the goods to a multi-item bidder and never overly diffuse them to single-item bidders.
ISSN:0899-8256
1090-2473
DOI:10.1016/j.geb.2012.08.002