Journal Article

Strategic Jump Bidding in English Auctions

Christopher Avery

in The Review of Economic Studies

Published on behalf of Review of Economic Studies Ltd

Volume 65, issue 2, pages 185-210
Published in print April 1998 | ISSN: 0034-6527
Published online April 1998 | e-ISSN: 1467-937X | DOI: http://dx.doi.org/10.1111/1467-937X.00041
Strategic Jump Bidding in English Auctions

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This paper solves for equilibria of sequential bid (or English) auctions with affiliated values when jump bidding strategies may be employed to intimidate one's opponents. In these equilibria, jump bids serve as correlating devices which select asymmetric bidding functions to be played subsequently. Each possibility of jump bidding provides a Pareto improvement for the bidders from the symmetric equilibrium of a sealed bid, second-price auction. The expanded set of equilibria can approximate either first- or second-price outcomes and produce exactly the set of expected prices between those two bounds. These results contrast with standard conclusions that equate English and second-price auctions.

Journal Article.  0 words. 

Subjects: Economics

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