On the benefits of dynamic bidding when participation is costly

David McAdams ()

Journal of Economic Theory, 2015, vol. 157, issue C, 959-972

Abstract: Consider a second-price auction with costly bidding in which bidders with i.i.d. private values have multiple opportunities to bid. If bids are observable, the resulting dynamic-bidding game generates greater expected total welfare than if bids were sealed, for any given reserve price. Making early bids observable allows high-value bidders to signal their strength and deter others from entering the auction. Nonetheless, as long as the seller can commit to a reserve price, expected revenue is higher when bids are observable than when they are sealed.

Keywords: Dynamic bidding; Bidding cost; Preemptive bid; Entry deterrence; Multi-round auction; Communication cost (search for similar items in EconPapers)
JEL-codes: D44 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jetheo:v:157:y:2015:i:c:p:959-972

DOI: 10.1016/j.jet.2015.03.003

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