Bidding to lose? Auctions with resale

Pagnozzi, Marco

doi:10.1111/j.0741-6261.2007.00127.x

Cited by 35 publications

(28 citation statements)

References 25 publications

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“…Price deviation is measured as the di¤erence between what was obtained in the auction with resale given various bargaining structures and the expected revenue, V (2) , obtainable in a standard English auction without resale. 16 As bargaining power is shifted away from the reseller, revenue drops for the initial seller but not in a consistent manner as the 50/50 treatment generates a stronger price deviation than the Final Buyer Advantage treatment. Across all treatments, bidders are demand reducing and e¤ectively splitting revenue that would have been earned by the initial auction seller in the resale market.…”

Section: E¢ Ciency and Revenue (Standard Resale)mentioning

confidence: 99%

Speculation and demand reduction in English clock auctions with resale

Saral

2012

Journal of Economic Behavior & Organization

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Many auctions are followed by a resale market which occurs when the winner of the auction resells the item won to one of the participants from the original auction. The existence of such transactions may initially appear counter intuitive. However, this paper will show that active inter-bidder resale results from payo¤ maximizing decisions in the auction that take into account the incentives of a resale opportunity. Speci…cally, I examine how the existence of an inter-bidder resale opportunity impacts bidder behavior in an English clock auction, and to what extent altering the bargaining power of the …nal buyer and reseller in the resale market determines the strategies followed in the initial auction, in an attempt to understand the existence of these inter-bidder transactions. Theoretical and behavioral analysis is used to develop hypotheses of speculation (bidding above value) and demand reduction (bidding below value) which are directly tested in a controlled experimental setting. While value bidding is a dominant strategy in a standard English clock auction without resale, when resale is allowed, this theoretical claim is weaker. Demand reduction is observed when the bargaining power is shifted to the …nal buyer in resale and when the bargaining power is shifted toward the reseller, speculation is observed. The revenue achieved in the initial auction depends on the behavior observed in the auction. Regardless of bargaining power, revenue is shown to decrease below what would have been earned in an English auction without resale due to demand reduction. When the reseller has the bargaining power, and speculation is observed, this loss in revenue is somewhat mitigated by increased speculation. JEL Codes: D44 C90

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Section: E¢ Ciency and Revenue (Standard Resale)mentioning

confidence: 99%

Speculation and demand reduction in English clock auctions with resale

Saral

2012

Journal of Economic Behavior & Organization

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“…The literature on auctions with resale provides six main reasons for resale: (i) New information regarding the values of objects arrives after the auctions (see Haile (1999Haile ( , 2000Haile ( , 2001Haile ( , 2003 and Gupta and Lebrun (1999)), (ii) new buyers arrive after the auction is over (Haile (1999)), (iii) asymmetry in the auction may lead to inefficient allocation (Zheng (2002); Hafalir and Krishna (2008)), (iv) presence of speculators in the auction (Garratt and Tröger (2006);Pagnozzi (2007Pagnozzi ( , 2009Pagnozzi ( , 2010), (v) coordination on collusive outcome (Garratt, Tröger, and Zheng (2009)), and (vi) misperception of resale markets (Georganas (2011)). Our setup is closest to the third type because a multi-object auction setting with complementarities provides a natural asymmetry in terms of demand of bidders and therefore may lead to inefficient allocation under different formats.…”

Section: Introductionmentioning

confidence: 99%

Multi-object auctions with resale: Theory and experiment

Filiz‐Ozbay

Lopez-Vargas

Özbay

2015

Games and Economic Behavior

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Abstract. We study multi-object auctions in the presence of post-auction trade opportunities among bidders who have either single-or multi-object demand. We focus on two formats: Vickrey auctions where package bidding is possible and simultaneous second-price auctions. We show that, under complementarities, the Vickrey format has an equilibrium where the objects are allocated efficiently at the auction stage whether resale markets are present or not. The simultaneous second-price, on the other hand, leads to inefficiency with or without resale possibility. Our experimental findings show that the possibility of resale in second-price auctions decreases the efficiency rate at the auction stage compared to the no resale case. However, after resale, the efficiency rate in second-price is as high as that of Vickrey auction without resale outcomes in the experiment.Preventing resale neither benefits nor hurts auction revenues in a second-price format. (JEL D44, C72, C91)

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“…In this paper, we follow Gupta and Lebrun (1999) and Pagnozzi (2007) to assume that after the initial auction stage, bidders' valuations become commonly known and the resale stage is conducted in a standard Nash bargaining game.…”

Section: Introductionmentioning

confidence: 99%

The impact of resale on entry in second price auctions

Che

Lee

Yang

2013

Mathematical Social Sciences

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This paper investigates the effect of resale allowance on entry strategies in a second price auction with two bidders whose entries are sequential and costly. We first characterize the perfect Bayesian equilibrium in cutoff strategies. We then show that there exists a unique threshold such that if the reseller's bargaining power is greater (less) than the threshold, resale allowance causes the leading bidder (the following bidder) to have a higher (lower) incentive on entry; i.e., the cutoff of entry becomes lower (higher). We also discuss asymmetric bidders and the original seller's expected revenue.

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Bidding to lose? Auctions with resale

Cited by 35 publications

References 25 publications

Speculation and demand reduction in English clock auctions with resale

Speculation and demand reduction in English clock auctions with resale

Multi-object auctions with resale: Theory and experiment

The impact of resale on entry in second price auctions

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