 Auctions with speculators: An experimental studyRodney Garratt and Sotiris Georganas Games and Economic Behavior, 2021, vol. 128, issue C, 256-270 Abstract: We run experiments on second-price auctions with resale opportunities, where a zero-value bidder, called a speculator, is commonly known to exist. Garratt and Tröger (2006a) show that there is a continuum of speculative equilibria, apart from the standard bid-your-value one, in which the speculator gets the good in the first stage auction with positive probability. She pays a price of zero and resells it to the private-value bidder in the second stage. In the most extreme equilibrium, the private-value bidder always bids zero and the speculator obtains the good. We find that bidders frequently play strategies that are consistent with a speculative equilibrium. When the speculative equilibrium is not observed, the presence of the speculator leads to more aggressive bidding by private-value bidders that results in increased revenue for the seller. An increase in the number of private-value bidders makes speculation harder, but does not eliminate it. Keywords: Auctions; Resale; Experiment; Speculators (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:gamebe:v:128:y:2021:i:c:p:256-270 DOI: 10.1016/j.geb.2021.03.004 Access Statistics for this article Games and Economic Behavior is currently edited by E. Kalai More articles in Games and Economic Behavior from Elsevier |
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