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The Declining Price Effect in Sequential Auctions: What Theory Does Not Predict

Author

Listed:
  • Olivier Chanel

    (GREQAM, Marseilles)

  • Stéphanie Vincent

    (Institute of Economics, University of Copenhagen)

Abstract

This paper studies different explanations given for the "price decline anomaly" in sequential auctions, a phenomenon also known as the "afternoon effect". It surveys the dedicated theoretical models and then explores the influence of the institutional or market characteristics (of the sale) on the price trend. Next , it presents different methods used for measuring price trends and analytically identifies the differences between them. Finally, data from wine auctions are used to show that different methods may lead to opposite trends from the same data and that the number of identical objects being sold influences the price trend.

Suggested Citation

  • Olivier Chanel & Stéphanie Vincent, 1999. "The Declining Price Effect in Sequential Auctions: What Theory Does Not Predict," CIE Discussion Papers 1999-13, University of Copenhagen. Department of Economics. Centre for Industrial Economics.
    • Handle: RePEc:kud:kuieci:1999-13
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    File URL: http://www.econ.ku.dk/cie/dp/dp_1997-1999/1999-13.pdf/
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    Citations

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    Cited by:

    1. Leufkens, Kasper & Peeters, Ronald & Vermeulen, Dries, 2010. "Sequential auctions with synergies: The paradox of positive synergies," Economics Letters, Elsevier, vol. 109(3), pages 139-141, December.

    More about this item

    Keywords

    multiple unit auctions; price decline; index Numbers; bootstrap simulations;
    All these keywords.

    JEL classification:

    • C15 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Statistical Simulation Methods: General
    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions

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