Big Bids and Bidder Behavior in Uniform Price Auctions: Evidence from Peer-to-Peer Loan Markets

Garrett T. Senney () and Jonathan R. Lhost ()
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Garrett T. Senney: Office of the Comptroller of the Currency
Jonathan R. Lhost: Lawrence University

Review of Industrial Organization, 2023, vol. 63, issue 3, No 3, 349-372

Abstract: Abstract We investigate the effect of big bids on uniform price auctions with the use of data from peer-to-peer loan auctions. Following a big bid by a prospective lender, subsequent bidders are less likely to enter the auction, and those that do enter tend to bid higher interest rates. We show that bidders are not reacting to the identity of the big bidder—just to the bigness of the bid. Additionally, we find that auctions with a big bid receive fewer bids overall, but these loan requests are still more likely to get funded and to have higher interest rates. These results have strong implications for maximizing a seller’s revenue (or minimizing a buyer’s cost in a procurement auction) and the allocative efficiency in uniform price auctions.

Keywords: Auctions; Bidding; Crowdfunding; Peer-to-peer lending (search for similar items in EconPapers)
JEL-codes: D82 D83 L10 L86 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (1)

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DOI: 10.1007/s11151-023-09912-2

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