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An experimental study of signaling in auctions with a flexible reserve price

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  • Khoroshilov, Yuri

Abstract

This paper presents the results of an experimental study of preemptive jump bidding in English auctions with a flexible reserve price. While one of the possible explanations for jump bidding is based on signaling arguments, the ability of the seller to adjust his decision to accept an offer based on the bidding history makes the existence of a signaling equilibrium questionable. This paper shows that the seller's ability to set the reserve price after observing the opening bid reduces both jump bidding behavior and the use and interpretation of opening bids as a signaling device.

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  • Khoroshilov, Yuri, 2015. "An experimental study of signaling in auctions with a flexible reserve price," The North American Journal of Economics and Finance, Elsevier, vol. 34(C), pages 124-137.
    • Handle: RePEc:eee:ecofin:v:34:y:2015:i:c:p:124-137
    DOI: 10.1016/j.najef.2015.09.010
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    References listed on IDEAS

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    1. Dodonova, Anna, 2017. "Preemptive bidding and Pareto efficiency in takeover auctions," Economics Letters, Elsevier, vol. 159(C), pages 214-216.

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