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Jump bidding in the war of attrition

Author

Listed:
  • Bi, Wei
  • Ding, Huiyun

Abstract

This paper studies jump bidding in a war of attrition, where a bidder makes a costly preemptive commitment to deter opponents. We identify a Double-Edged Sword Effect: while jump bidding increases early-stage costs for the jump bidder, it enhances her ability to deter high-valuation opponents in later stages. The bidder jump bids when she believes that her opponent is likely to have a high valuation and not quit soon, such as when the valuation distribution is convex or bounded away from zero. Although jump bidding may result in inefficient allocation, it reduces total attrition costs and can improve overall welfare ex ante.

Suggested Citation

  • Bi, Wei & Ding, Huiyun, 2025. "Jump bidding in the war of attrition," Mathematical Social Sciences, Elsevier, vol. 136(C).
    • Handle: RePEc:eee:matsoc:v:136:y:2025:i:c:s0165489625000472
    DOI: 10.1016/j.mathsocsci.2025.102432
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    More about this item

    Keywords

    Jump bidding; War of attrition; Double-Edged Sword Effect;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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