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Strategic Jump Bidding in English Auctions

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  • Christopher Avery

Abstract

This paper solves for equilibria of sequential bid (or English) auctions with affiliated values when jump bidding strategies may be employed to intimidate one's opponents. In these equilibria, jump bids serve as correlating devices which select asymmetric bidding functions to be played subsequently. Each possibility of jump bidding provides a Pareto improvement for the bidders from the symmetric equilibrium of a sealed bid, second-price auction. The expanded set of equilibria can approximate either first- or second-price outcomes and produce exactly the set of expected prices between those two bounds. These results contrast with standard conclusions that equate English and second-price auctions.

Suggested Citation

  • Christopher Avery, 1998. "Strategic Jump Bidding in English Auctions," Review of Economic Studies, Oxford University Press, vol. 65(2), pages 185-210.
  • Handle: RePEc:oup:restud:v:65:y:1998:i:2:p:185-210.
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    File URL: http://hdl.handle.net/10.1111/1467-937X.00041
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