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A theory of jump bidding in ascending auctions

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  • Isaac, R. Mark
  • Salmon, Timothy C.
  • Zillante, Arthur

Abstract

Jump bidding is a commonly observed phenomenon that involves bidders in ascending auctions submitting bids higher than required by the auctioneer. Such behavior is typically explained as due to irrationality or to bidders signaling their value. We present field data that suggests such explanations are unsatisfactory and construct an alternative model in which jump bidding occurs due to strategic concerns and impatience. We go on to examine the impact of jump bidding on the outcome of ascending auctions in an attempt to resolve some policy disputes in the design of ascending auctions.
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Suggested Citation

  • Isaac, R. Mark & Salmon, Timothy C. & Zillante, Arthur, 2007. "A theory of jump bidding in ascending auctions," Journal of Economic Behavior & Organization, Elsevier, vol. 62(1), pages 144-164, January.
  • Handle: RePEc:eee:jeborg:v:62:y:2007:i:1:p:144-164
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    More about this item

    JEL classification:

    • C9 - Mathematical and Quantitative Methods - - Design of Experiments
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions

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