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The Wait-and-See Option in Ascending Price Auctions


  • Olivier Compte

    (CERAS-ENPC and CNRS,)

  • Philippe Jehiel

    (CERAS-ENPC and University College London,)


Ascending auctions offer agents the option to wait and see before deciding to drop out. We show that in contexts where as time proceeds agents get finer and finer estimates of their valuations, incentives to drop out at one's expected valuation are weak: it is optimal for agents to wait and see. We first illustrate the claim in a private value setting. We next analyze an interdependent value setting in which this wait and see option results in an imperfect information aggregation. We also analyze the implications for the seller's revenue, and show that the ascending format may dominate the second-price format, independently of the date at which the second price auction is run. (JEL: D44, D83) Copyright (c) 2004 The European Economic Association.

Suggested Citation

  • Olivier Compte & Philippe Jehiel, 2004. "The Wait-and-See Option in Ascending Price Auctions," Journal of the European Economic Association, MIT Press, vol. 2(2-3), pages 494-503, 04/05.
  • Handle: RePEc:tpr:jeurec:v:2:y:2004:i:2-3:p:494-503

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    References listed on IDEAS

    1. Paul R. Milgrom, 1985. "Auction Theory," Cowles Foundation Discussion Papers 779, Cowles Foundation for Research in Economics, Yale University.
    2. Lawrence M. Ausubel & Peter Cramton & Marek Pycia & Marzena Rostek & Marek Weretka, 2014. "Demand Reduction and Inefficiency in Multi-Unit Auctions," Review of Economic Studies, Oxford University Press, vol. 81(4), pages 1366-1400.
    3. Cramton Peter & Schwartz Jesse A, 2002. "Collusive Bidding in the FCC Spectrum Auctions," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 1(1), pages 1-20, December.
    4. Lawrence M. Ausubel & Peter Cramton & Wynne P. Jones, 2012. "System and Method for an Auction of Multiple Types of Items," Papers of Peter Cramton 11acjam, University of Maryland, Department of Economics - Peter Cramton, revised 2012.
    5. Milgrom,Paul, 2004. "Putting Auction Theory to Work," Cambridge Books, Cambridge University Press, number 9780521536721, March.
    6. Lawrence Ausubel & Peter Cramton, 2004. "Vickrey auctions with reserve pricing," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 23(3), pages 493-505, March.
    7. William Vickrey, 1961. "Counterspeculation, Auctions, And Competitive Sealed Tenders," Journal of Finance, American Finance Association, vol. 16(1), pages 8-37, March.
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    Cited by:

    1. Olivier Compte & Philippe Jehiel, 2007. "Auctions and information acquisition: sealed bid or dynamic formats?," RAND Journal of Economics, RAND Corporation, vol. 38(2), pages 355-372, June.
    2. Laurent Lamy, 2009. "Ascending auctions: some impossibility results and their resolutions with final price discounts," PSE Working Papers halshs-00575076, HAL.
    3. B Kelsey Jack, 2009. "Auctioning Conservation Contracts in Indonesia - Participant Learning in Multiple Trial Rounds," CID Working Papers 35, Center for International Development at Harvard University.
    4. Tanjim Hossain, 2008. "Learning by bidding," RAND Journal of Economics, RAND Corporation, vol. 39(2), pages 509-529.
    5. repec:eee:indorg:v:54:y:2017:i:c:p:125-147 is not listed on IDEAS

    More about this item

    JEL classification:

    • 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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