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The Responsiveness of Tax Lien Investors in English Auctions to Matching Rules: Evidence from Illinois

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  • Joshua J. Miller

    (University of Illinois at Chicago)

  • Silda Nikaj

    (Texas Christian University)

Abstract

Auctions allowing competitors to match the current high bid are thought to be suboptimal, particularly compared to auctions where new bids must exceed the current high bid (Milgrom, 2004). To date no study has examined, empirically, the effect of allowing matching bids. A recent policy innovation in Illinois provides an opportunity to estimate the effect of matching on winning bids. Using administrative data from five suburban Illinois counties on the auction of 127,073 liens, we find that an English auction design that allows matching is associated with higher winning bids when compared to an English design that does not allow matching. These higher winning bids increase interest fees on tax delinquent property owners by 20 percent. The paper is the first to estimate the cost of matching on auction outcomes.

Suggested Citation

  • Joshua J. Miller & Silda Nikaj, 2013. "The Responsiveness of Tax Lien Investors in English Auctions to Matching Rules: Evidence from Illinois," The Review of Regional Studies, Southern Regional Science Association, vol. 43(1), pages 81-96, Summer.
    • Handle: RePEc:rre:publsh:v:43:y:2013:i:1:p:81-96
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    References listed on IDEAS

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    3. Menezes, Flavio M., 2008. "An Introduction to Auction Theory," OUP Catalogue, Oxford University Press, number 9780199275991, Decembrie.
    4. Ashenfelter, Orley & Genesove, David, 1992. "Testing for Price Anomalies in Real-Estate Auctions," American Economic Review, American Economic Association, vol. 82(2), pages 501-505, May.
    5. Milgrom,Paul, 2004. "Putting Auction Theory to Work," Cambridge Books, Cambridge University Press, number 9780521536721.
    6. Luc Anselin & Daniel Arribas-Bel, 2013. "Spatial fixed effects and spatial dependence in a single cross-section," Papers in Regional Science, Wiley Blackwell, vol. 92(1), pages 3-17, March.
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    Cited by:

    1. Alm, James & Hawley, Zackary & Lee, Jin Man & Miller, Joshua J., 2016. "Property tax delinquency and its spillover effects on nearby properties," Regional Science and Urban Economics, Elsevier, vol. 58(C), pages 71-77.

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