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Bid Increments in Second-Price Sealed Bid Auctions

  • Richard Cox

    (University of Arkansas at Little Rock)

This note concerns bidding in a hybrid first-price and second-price auction. The winning bidder sometimes pays his bid and sometimes pays an amount determined by the next highest bid. In internet auctions where bidders wait until the end of the auction to bid the auction reduces to a sealed-bid auction and the bid function we derive may be relevant in such cases.

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Paper provided by EconWPA in its series Microeconomics with number 0503007.

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Length: 7 pages
Date of creation: 10 Mar 2005
Date of revision:
Handle: RePEc:wpa:wuwpmi:0503007
Note: Type of Document - pdf; pages: 7
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  1. Riley, John G & Samuelson, William F, 1981. "Optimal Auctions," American Economic Review, American Economic Association, vol. 71(3), pages 381-92, June.
  2. Ockenfels, Axel & Roth, Alvin E., 2006. "Late and multiple bidding in second price Internet auctions: Theory and evidence concerning different rules for ending an auction," Games and Economic Behavior, Elsevier, vol. 55(2), pages 297-320, May.
  3. Patrick Bajari & Ali Horta�su, 2004. "Economic Insights from Internet Auctions," Journal of Economic Literature, American Economic Association, vol. 42(2), pages 457-486, June.
  4. Alvin E. Roth & Axel Ockenfels, . "Last-Minute Bidding and the Rules for Ending Second-Price Auctions: Evidence from eBay and Amazon Auctions on the Internet," Papers on Strategic Interaction 2002-32, Max Planck Institute of Economics, Strategic Interaction Group.
  5. Chwe, Michael Suk-Young, 1989. "The discrete bid first auction," Economics Letters, Elsevier, vol. 31(4), pages 303-306, December.
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