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Why Do Sellers At Auctions Bid For Their Own Items? Theory And Evidence

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  • Michael Beckmann

Abstract

This paper illustrates, both theoretically and empirically, the determinants of seller bidding at auctions. Based on search theoretical considerations, seller bids are explained as the seller’s rejection of submitted price offers that fall short of his reservation price. The search model allows to derive testable implications on the seller’s bidding behavior. Using a unique data set from German auction houses, the estimation results provide evidence that supports the search theoretical implications. For example, seller bidding is complementary to the presence of bidding rings at auction. Moreover, art and antique auctions turn out to be particularly susceptible to seller bidding practices.

Suggested Citation

  • Michael Beckmann, 2004. "Why Do Sellers At Auctions Bid For Their Own Items? Theory And Evidence," Schmalenbach Business Review (sbr), LMU Munich School of Management, vol. 56(4), pages 312-337, October.
  • Handle: RePEc:sbr:abstra:v:56:y:2004:i:4:312-337
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    Cited by:

    1. Calin Valsan & Robert Sproule, 2008. "Reservation Prices And Pre-Auction Estimates: A Study In Abstract Art," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 10(24), pages 257-272, June.

    More about this item

    Keywords

    Auctions; Reservation Price; Search Model; Seller Bids.;

    JEL classification:

    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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