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Jump bidding and overconcentration in decentralized simultaneous ascending auctions

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  • Zheng, Charles Z.

Abstract

A model of English auctions is proposed to incorporate the possibility of jump bidding. When two objects are sold separately via such auctions, bidders signal their willingness to pay via jump bids, thereby forming rational expectations of the prices without relying on any central mediator. Hence a multi-item bidder does not suffer the exposure problem of having to buy an item while he is uncertain about the price of its complement. Single-item bidders, however, free-ride one another in competing against a multi-item bidder. Consequently, the auctions overly concentrate the goods to a multi-item bidder and never overly diffuse them to single-item bidders.

Suggested Citation

  • Zheng, Charles Z., 2012. "Jump bidding and overconcentration in decentralized simultaneous ascending auctions," Games and Economic Behavior, Elsevier, vol. 76(2), pages 648-664.
    • Handle: RePEc:eee:gamebe:v:76:y:2012:i:2:p:648-664
    DOI: 10.1016/j.geb.2012.08.002
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    1. Sandro Brusco & Giuseppe Lopomo, 2009. "Simultaneous ascending auctions with complementarities and known budget constraints," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 38(1), pages 105-124, January.
    2. Goeree, Jacob K. & Lien, Yuanchuan, 2014. "An equilibrium analysis of the simultaneous ascending auction," Journal of Economic Theory, Elsevier, vol. 153(C), pages 506-533.
    3. Jeremy Bulow & Jonathan Levin & Paul Milgrom, 2009. "Winning Play in Spectrum Auctions," Discussion Papers 08-023, Stanford Institute for Economic Policy Research.
    4. Sandro Brusco & Giuseppe Lopomo, 2008. "Budget Constraints And Demand Reduction In Simultaneous Ascending‐Bid Auctions," Journal of Industrial Economics, Wiley Blackwell, vol. 56(1), pages 113-142, March.
    5. Lim, Wooyoung & Xiong, Siyang, 2021. "Does jump bidding increase sellers’ revenue? Theory and experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 189(C), pages 84-110.
    6. Lavi, Ron & Oren, Sigal, 2012. "Side-communication yields efficiency of ascending auctions: The two-items case," Games and Economic Behavior, Elsevier, vol. 76(2), pages 439-456.

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    More about this item

    Keywords

    Auction; Multiple object auctions; Simultaneous auctions; Synergy; Complementarity; Exposure problem; Threshold problem;
    All these keywords.

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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