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Why do bidders drop out from a sequential auction

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  • Menezes, Flavio Marques
  • Engelbrecht-Wiggans, Richard

Abstract

In actual sequential auctions, 1) bidders typically incur a cost in continuing from one sale to the next, and 2) bidders decide whether or not to continue. To investigate the question 'why do bidders drop out,' we define a sequential auction model with continuation costs and an endogenously determined number of bidders at each sale, and we characterize the equilibria in this model. Simple examples illustrate the effect of several possible changes to this model.

Suggested Citation

  • Menezes, Flavio Marques & Engelbrecht-Wiggans, Richard, 2000. "Why do bidders drop out from a sequential auction," FGV/EPGE Economics Working Papers (Ensaios Economicos da EPGE) 364, FGV/EPGE - Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil).
  • Handle: RePEc:fgv:epgewp:364
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