On the declining price anomaly in wine auctions

Victor Ginsburgh

No 1997034, LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: The anomaly is concerned with the observation that in multiple-item auctions of identical ob- jects, prices tend to decline over time. We show that in the case of wine auctions which have been analyzed frequently, the anomaly is likely to be caused by the the fact that most bids are entered by absentees. If only absentees are interested in a multiple-lot auction and have sent different written valuations for the various lots, it is obvious that the auctioneer will sell the lots to satisfy bids in decreasing order of valuation.

Date: 1997-04-01
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