Auctions with endogenous opting‐out fees and recursive winning procedures from the Talmud

Mordechai E. Schwarz

International Journal of Economic Theory, 2021, vol. 17, issue 4, 345-374

Abstract: This article analyzes open ascending and first‐price sealed‐bid auctions with uncertain value, recursive winning procedure, and cooling‐off right in return for an endogenous opting‐out fee. I show that although equilibrium bidding strategies in these auctions tend to be less aggressive than in auctions with costless withdrawals, expected revenues are usually higher. Both auctions are spurious‐bidding free and the sealed‐bid auction is almost shill‐bidding robust.

Date: 2021
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