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Auction Price Anomalies: Evidence from Wool Auctions in Australia

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  • CHRIS JONES
  • FLAVIO MENEZES
  • FRANCIS VELLA

Abstract

Using detailed Australian wool auction data we test for further evidence of pricing anomalies at sequential auctions. We find that an anomaly frequently exists and order is frequently endogenously determined. Moreover, prices increase through some sales and decrease through others. We examine whether it is possible to explain the variation in the anomaly across sales and conclude that there is no systematic relationship between the direction of the price anomaly and the characteristics of the wool or the auction. We do, however, find evidence that an anomaly is more likely in longer sales.

Suggested Citation

  • Chris Jones & Flavio Menezes & Francis Vella, 2004. "Auction Price Anomalies: Evidence from Wool Auctions in Australia," The Economic Record, The Economic Society of Australia, vol. 80(250), pages 271-288, September.
    • Handle: RePEc:bla:ecorec:v:80:y:2004:i:250:p:271-288
    DOI: 10.1111/j.1475-4932.2004.00188.x
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    Cited by:

    1. Gerard J. van den Berg & Jan C. van Ours & Menno P. Pradhan, 2001. "The Declining Price Anomaly in Dutch Dutch Rose Auctions," American Economic Review, American Economic Association, vol. 91(4), pages 1055-1062, September.
    2. Flavio Menezes & Paulo Monteiro, 2003. "Synergies and price trends in sequential auctions," Review of Economic Design, Springer;Society for Economic Design, vol. 8(1), pages 85-98, August.
    3. Audrey Hu & Liang Zou, 2014. "Sequential Auctions, Price Trends, and Risk Preferences," Tinbergen Institute Discussion Papers 14-139/I, Tinbergen Institute.
    4. Mezzetti, Claudio, 2008. "Aversion to Price Risk and the Afternoon Effect," The Warwick Economics Research Paper Series (TWERPS) 857, University of Warwick, Department of Economics.
    5. Yunhan Li & J. Scott Shonkwiler, 2021. "Assessing the Role of Ordering in Sequential English Auctions – Evidence from the Online Western Video Market Auction," American Journal of Agricultural Economics, John Wiley & Sons, vol. 103(1), pages 90-105, January.
    6. Simon Grant & Atsushi Kajii & Flavio Menezes & Matthew J. Ryan, 2006. "Auctions with options to re‐auction," International Journal of Economic Theory, The International Society for Economic Theory, vol. 2(1), pages 17-39, March.
    7. Sanna Laksa & Daniel Marszalec, 2020. "Morning-Fresh: Declining Prices and the Right-to-Choose in a Faroese Fish Market," CIRJE F-Series CIRJE-F-1141, CIRJE, Faculty of Economics, University of Tokyo.
    8. Menezes, Flavio Marques & Engelbrecht-Wiggans, Richard, 2001. "Why do Bidders Drop Out from a Sequential Auction," Revista Brasileira de Economia - RBE, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil), vol. 55(1), January.
    9. Audrey Hu & Liang Zou, 2016. "Sequential Auctions with Generalized Interdependent Values," Tinbergen Institute Discussion Papers 16-016/I, Tinbergen Institute.
    10. Dejan Trifunovic, 2014. "Sequential Auctions And Price Anomalies," Economic Annals, Faculty of Economics and Business, University of Belgrade, vol. 59(200), pages 7-42, January –.
    11. Stuart Kells, 2001. "Prices In Sequential Auctions: Preliminary Evidence From Australian Rare Book Auctions," Department of Economics - Working Papers Series 820, The University of Melbourne.

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    More about this item

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • L79 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Other

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