Shills and snipes

Subir Bose and Arup Daripa ()

Games and Economic Behavior, 2017, vol. 104, issue C, 507-516

Abstract: Online auctions with a fixed end-time often experience a sharp increase in bidding towards the end (“sniping”) despite using a proxy-bidding format. We provide a novel explanation of this phenomenon under private values. We show that it is closely related to shill bidding by the seller. Late-bidding by buyers arises not to snipe each other, but to snipe the shill bids. We allow the number of bidders in the auction to be random and model a continuous bid arrival process. We show the existence of late-bidding equilibrium. Next, we characterize all equilibria under a natural monotonicity condition and show that they all involve sniping with positive probability. We characterize the time at which such late bidding occurs and discuss welfare implications.

Keywords: Online auctions; Correlated private values; Last-minute bidding; Sniping; Shill bidding; Random bidder arrival; Continuous bid time; Continuous bid arrival process (search for similar items in EconPapers)
JEL-codes: D44 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Related works:
Working Paper: Shills and Snipes (2015)
Working Paper: Shills and Shipes (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:gamebe:v:104:y:2017:i:c:p:507-516

DOI: 10.1016/j.geb.2017.05.010

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