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Does suspending an English Auction increase revenues?

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  • Zhang, Sookie Xue
  • Bayer, Ralph-Christopher

Abstract

This study is motivated by the observation that sellers in Australia often suspend housing auctions under a questionable pretense. We conjecture that this practice is observed since the suspension leads to a quasi-endowment effect, which increases revenues. We conducted English auctions with and without stoppages for a real good in the laboratory. Unexpectedly, we observe similar auction prices across treatments. A deeper exploration shows that the subjects who held the highest bids during the suspension won less frequently in the suspension treatment than their counterparts in the control treatment. We infer that there must be two canceling opposite effects, a cooling-off effect for the currently highest bidder and a heating-up effect for the other, taking place during the suspension.

Suggested Citation

  • Zhang, Sookie Xue & Bayer, Ralph-Christopher, 2018. "Does suspending an English Auction increase revenues?," Economics Letters, Elsevier, vol. 162(C), pages 98-100.
    • Handle: RePEc:eee:ecolet:v:162:y:2018:i:c:p:98-100
    DOI: 10.1016/j.econlet.2017.10.025
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    References listed on IDEAS

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    More about this item

    Keywords

    English Auction; Experiment;

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D11 - Microeconomics - - Household Behavior - - - Consumer Economics: Theory

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