Defensive sniping and efficiency in simultaneous hard-close proxy auctions

Greg Taylor

Journal of Mathematical Economics, 2012, vol. 48, issue 1, 51-58

Abstract: A well-known myopic bidding strategy fails to support an equilibrium of simultaneous ascending proxy auctions for heterogeneous items when a hard-close rule is in place. This is because, in common with the single-auction case, last minute bidding (sniping) is a best response to naive behaviour. However, a modification to the myopic strategy in which all bidders submit an additional bid in the closing stages of the auction–a practice I call ‘defensive sniping’–is shown to yield an efficient, belief-free equilibrium of such environments. This equilibrium is essentially unique within the class of belief-free, efficient equilibria.

Keywords: Hard-close; Simultaneous proxy auctions; Efficiency; Myopic bidding; Belief-free (search for similar items in EconPapers)
Date: 2012
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Persistent link: https://EconPapers.repec.org/RePEc:eee:mateco:v:48:y:2012:i:1:p:51-58

DOI: 10.1016/j.jmateco.2011.11.006

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