IDEAS home Printed from https://ideas.repec.org/a/spr/joecth/v16y2000i3p585-611.html
   My bibliography  Save this article

Bidding up, buying out and cooling-off: an examination of auctions with withdrawal rights

Author

Listed:
  • John Asker

    (Department of Economics, Harvard University, Littauer Center, 1875 Cambridge St, Cambridge, MA 02138, USA)

Abstract

This paper considers a model in which bidders in an auction are faced with uncertainty as to their final valuation of the auctioned object. This uncertainty is resolved after the auction has taken place. It is argued that the inclusion of a cooling-off right raises the expected revenue to the seller when bidders face a risk of the object being a strict `bad', in that owning the object incurs negative utility to the winner of the auction. The model is then tested in a laboratory setting. The evidence from this experiment supports the predictions of the theory.

Suggested Citation

  • John Asker, 2000. "Bidding up, buying out and cooling-off: an examination of auctions with withdrawal rights," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 16(3), pages 585-611.
    • Handle: RePEc:spr:joecth:v:16:y:2000:i:3:p:585-611
    Note: Received: April 23, 1999; revised version: March 20, 2000
    as

    Download full text from publisher

    File URL: http://link.springer.de/link/service/journals/00199/papers/0016003/00160585.pdf
    Download Restriction: Access to the full text of the articles in this series is restricted
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Eric Rasmusen, 2004. "Getting Carried Away in Auctions as Imperfect Value Discovery," Industrial Organization 0409001, University Library of Munich, Germany.
    2. Péter Esö & Lucy White, 2004. "Precautionary Bidding in Auctions," Econometrica, Econometric Society, vol. 72(1), pages 77-92, January.
    3. Ottorino Chillemi & Claudio Mezzetti, 2014. "Optimal procurement mechanisms: bidding on price and damages for breach," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 55(2), pages 335-355, February.
    4. Xiao, Haohan & Xu, Min & Wang, Shuaian, 2024. "Auction-based parking mechanisms considering withdrawal behaviors," Transport Policy, Elsevier, vol. 147(C), pages 81-93.
    5. Mordechai E. Schwarz, 2023. "A master of two servants: lessons from the israeli experience about the effect of separation of powers on public accountability and social welfare," Constitutional Political Economy, Springer, vol. 34(1), pages 59-87, March.
    6. Atwell Courtenay, 2015. "Cooling off periods in franchise contracts: from consumer protection mechanisms to paternalistic remedies for behavioral biases," Business and Politics, De Gruyter, vol. 17(4), pages 697-721, December.
    7. Lipschütz Itay & Schwarz Mordechai E., 2020. "Fairness Vs. Economic Efficiency: Lessons from an Interdisciplinary Analysis of Talmudic Bankruptcy Law," Review of Law & Economics, De Gruyter, vol. 16(3), pages 1-38, November.
    8. Mordechai E. Schwarz, 2020. "A Master of Two Servants: The Effect of Separation of Powers on Public Accountability and Social Welfare," Proceedings of International Academic Conferences 10612466, International Institute of Social and Economic Sciences.

    More about this item

    Keywords

    Auctions; Withdrawal rights; Auction experiments; Cooling-off rights.;
    All these keywords.

    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • K11 - Law and Economics - - Basic Areas of Law - - - Property Law

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:joecth:v:16:y:2000:i:3:p:585-611. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.