 Lower price increases, the bounded rationality of bidders, and underbidding concerns in online agricultural land auctions: The Ukrainian caseOlena Myrna Journal of Agricultural Economics, 2022, vol. 73, issue 3, 826-844 Abstract: Auction theory suggests that bidders follow a dominant strategy that is to submit the highest bid equal to the bidder's true valuation in an ascending price auction with independent and private values. Bidders in real‐world auctions may deviate from this strategy, resulting in either underbidding—submitting bids lower than the valuation—or overbidding—bidding an amount in excess of the real value. This study utilises data collected from online agricultural land lease auctions in Ukraine that took place between October 2018 and September 2019 to analyse the occurrence of minimal price increases, which may indicate underbidding. It investigates if factors—auction and property characteristics—that typically explain deviations from the dominant strategy—can also explain bidding behaviours in land lease auctions. The estimation using a heteroscedastic probit model reveals that underbidding could reasonably be attributed to low competition, insufficient time to place a subsequent bid, very small bid increments, and cumbersome entry fees. Date: 2022 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:bla:jageco:v:73:y:2022:i:3:p:826-844 Ordering information: This journal article can be ordered from Access Statistics for this article Journal of Agricultural Economics is currently edited by David Harvey More articles in Journal of Agricultural Economics from Wiley Blackwell |
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