Entry by successful speculators in auctions with resale

Marco Pagnozzi and Krista Saral

Experimental Economics, 2019, vol. 22, issue 2, No 9, 477-505

Abstract: Abstract We experimentally analyze the role of speculators, who have no use value for the objects on sale, in auctions. The environment is a uniform-price sealed-bid auction for 2 identical objects, followed by a free-form bargaining resale market, with one positive-value bidder, and either one or two speculators who may choose simultaneously whether to enter the auction. We show that the bidder accommodates speculators by reducing demand in the auction and subsequently purchasing in the resale market, which encourages entry by speculators. The presence of multiple speculators induces each speculator to enter less often, but increases competition in the auction and the auction price. Speculators earn positive profits on average, except when multiple speculators enter the auction.

Keywords: Speculators; Entry; Multi-object auctions; Resale; Economic experiments (search for similar items in EconPapers)
JEL-codes: C90 D44 (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (3)

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Related works:
Working Paper: Entry by successful speculators in auctions with resale (2019)
Working Paper: Entry by Successful Speculators in Auctions with Resale (2017)
Working Paper: Entry by Successful Speculators in Auctions with Resale (2016)
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DOI: 10.1007/s10683-018-9564-5

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