Late and multiple bidding in second price Internet auctions: Theory and evidence concerning different rules for ending an auction

By Axel Ockenfels, Alvin E. Roth. Games Econ. Behav., 2006

345 citations recorded by the source corpus.

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.

View Paper: https://www.semanticscholar.org/paper/f89a16bd5293c45adac7ac5176ed2d33e4829498

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Citations in the corpus

A Greater Price for a Greater Good? Evidence that Consumers Pay More for Charity-Linked Products (2010, unknown): “When we repeat the analysis on a subsample of 27 Ariely, Ockenfels, and Roth (2005) and Ockenfels and Roth (2006) find that sniping is more common by more experienced bidders.”
Race Effects on Ebay (2015, background): “…price, even in the presence of sophisticated bidders, because a naïve bidder may have a higher private value for the item or because sophisticated bidders withhold their bids until the last minute to avoid competing against rising incremental bids (Roth and Ockenfels 2002; Ockenfels and Roth 2006).”