Efficient investment in a dynamic auction environment

On the benefits of dynamic bidding when participation is costly

“…Step One: Derive analogues to (4), (5) for all finite K. By (6), each bidder's interim expected equilibrium payoff K (v i ) = …”

“…This paper shows that, in fact, the seller's expected revenue is higher under dynamic bidding even if the seller can only commit to an unchanging reserve. 6 Another closely related paper is Levin and Peck [17] (hereafter "LP"), who consider a dynamic-entry game that can in some cases be interpreted as a second-price auction with zero reserve. 7 The basic threshold structure of equilibrium entry is similar here and in LP, but the papers take different (and complementary) analytical approaches.…”

“…Bulow and Klemperer [4], the key difference being that bidders here choose when to enter the auction. 6 Such limited commitment power arises naturally in some settings, such as the expert-services example mentioned earlier, in which the seller cannot directly observe when bidders incur the costs of participation but other bidders can. 7 …”