The Wait-and-See Option in Ascending Price Auctions
AbstractAscending auctions offer agents the option to wait and see before deciding to drop out. We show that in contexts where as time proceeds agents get finer and finer estimates of their valuations, incentives to drop out at one's expected valuation are weak: it is optimal for agents to wait and see. We first illustrate the claim in a private value setting. We next analyze an interdependent value setting in which this wait and see option results in an imperfect information aggregation. We also analyze the implications for the seller's revenue, and show that the ascending format may dominate the second-price format, independently of the date at which the second price auction is run. (JEL: D44, D83) Copyright (c) 2004 The European Economic Association.
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Bibliographic InfoArticle provided by MIT Press in its journal Journal of the European Economic Association.
Volume (Year): 2 (2004)
Issue (Month): 2-3 (04/05)
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Web page: http://www.mitpressjournals.org/jeea
Other versions of this item:
- Compte, O & Jehiel, P, 2004. "The wait-and-see option in ascending price auctions," Open Access publications from University College London http://discovery.ucl.ac.u, University College London.
- D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
- D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search, Learning, and Information
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- repec:hal:wpaper:halshs-00575076 is not listed on IDEAS
- Laurent Lamy, 2009. "Ascending auctions: some impossibility results and their resolutions with final price discounts," PSE Working Papers halshs-00575076, HAL.
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