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. © 2004 by the European Economic Association.
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Bibliographic InfoPaper provided by University College London in its series Open Access publications from University College London with number http://discovery.ucl.ac.uk/16667/.
Date of creation: Apr 2004
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Publication status: Published in Journal of the European Economic Association (2004-04) v.2, p.494-503
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Other versions of this item:
- Olivier Compte & Philippe Jehiel, 2004. "The Wait-and-See Option in Ascending Price Auctions," Journal of the European Economic Association, MIT Press, vol. 2(2-3), pages 494-503, 04/05.
- 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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