Does suspending an English Auction increase revenues?

Sookie Xue Zhang and Ralph-C Bayer ()

Economics Letters, 2018, vol. 162, issue C, 98-100

Abstract: This study is motivated by the observation that sellers in Australia often suspend housing auctions under a questionable pretense. We conjecture that this practice is observed since the suspension leads to a quasi-endowment effect, which increases revenues. We conducted English auctions with and without stoppages for a real good in the laboratory. Unexpectedly, we observe similar auction prices across treatments. A deeper exploration shows that the subjects who held the highest bids during the suspension won less frequently in the suspension treatment than their counterparts in the control treatment. We infer that there must be two canceling opposite effects, a cooling-off effect for the currently highest bidder and a heating-up effect for the other, taking place during the suspension.

Keywords: English Auction; Experiment (search for similar items in EconPapers)
JEL-codes: C91 D11 D44 (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:162:y:2018:i:c:p:98-100

DOI: 10.1016/j.econlet.2017.10.025

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