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Defensive sniping and efficiency in simultaneous hard-close proxy auctions

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  • Taylor, Greg

Abstract

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.

Suggested Citation

  • Taylor, Greg, 2012. "Defensive sniping and efficiency in simultaneous hard-close proxy auctions," Journal of Mathematical Economics, Elsevier, vol. 48(1), pages 51-58.
  • Handle: RePEc:eee:mateco:v:48:y:2012:i:1:p:51-58
    DOI: 10.1016/j.jmateco.2011.11.006
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    References listed on IDEAS

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