Defensive sniping and efficiency in simultaneous hard-close proxy auctions
A well-known myopic bidding strategy fails to support an equilibrium of simultaneous ascending proxy auctions for heterogeneous items when a hard-close rule is in place. This is because, in common with the single-auction case, last minute bidding (sniping) is a best response to naive behaviour. However, a modification to the myopic strategy in which all bidders submit an additional bid in the closing stages of the auction–a practice I call ‘defensive sniping’–is shown to yield an efficient, belief-free equilibrium of such environments. This equilibrium is essentially unique within the class of belief-free, efficient equilibria.
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