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Bid Increments in Second-Price Sealed Bid Auctions

Author

Listed:
  • Richard Cox

    (University of Arkansas at Little Rock)

Abstract

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.

Suggested Citation

  • Richard Cox, 2005. "Bid Increments in Second-Price Sealed Bid Auctions," Microeconomics 0506008, EconWPA.
  • Handle: RePEc:wpa:wuwpmi:0506008
    Note: Type of Document - pdf; pages: 6
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    File URL: https://econwpa.ub.uni-muenchen.de/econ-wp/mic/papers/0506/0506008.pdf
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    References listed on IDEAS

    as
    1. Patrick Bajari & Ali Horta├žsu, 2004. "Economic Insights from Internet Auctions," Journal of Economic Literature, American Economic Association, vol. 42(2), pages 457-486, June.
    2. Alvin E. Roth & Axel Ockenfels, 2002. "Last-Minute Bidding and the Rules for Ending Second-Price Auctions: Evidence from eBay and Amazon Auctions on the Internet," American Economic Review, American Economic Association, vol. 92(4), pages 1093-1103, September.
    3. Riley, John G & Samuelson, William F, 1981. "Optimal Auctions," American Economic Review, American Economic Association, vol. 71(3), pages 381-392, June.
    4. 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.
    5. Chwe, Michael Suk-Young, 1989. "The discrete bid first auction," Economics Letters, Elsevier, vol. 31(4), pages 303-306, December.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    sniper bidding; bid increments;

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions

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