Buy or wait, that is the option

Février Philippe, Laurent Linnemer and Michael Visser
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Février Philippe: CREST - Centre de Recherche en Économie et Statistique - ENSAI - Ecole Nationale de la Statistique et de l'Analyse de l'Information [Bruz] - X - École polytechnique - IP Paris - Institut Polytechnique de Paris - ENSAE Paris - École Nationale de la Statistique et de l'Administration Économique - IP Paris - Institut Polytechnique de Paris - CNRS - Centre National de la Recherche Scientifique

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Abstract: We report results from an experiment on two-unit sequential auctions with and without a buyer's option (which allows the winner of the first auction to buy the second unit). The four main auction institutions are studied. Observed bidding behavior is close to Nash equilibrium bidding in the auctions for the second unit, but not in the auctions for the first unit. Despite these deviations, the buyer's option is correctly used in most cases. The revenue ranking of the four auctions is the same as in single-unit experiments. Successive prices are declining when the buyer's option is available.

Keywords: Sequential Auctions; Buyer's option (search for similar items in EconPapers)
Date: 2007
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Citations: View citations in EconPapers (8)

Published in RAND Journal of Economics, 2007, 38 (1), pp.98-118. ⟨10.1111/j.1756-2171.2007.tb00046.x⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-00558198

DOI: 10.1111/j.1756-2171.2007.tb00046.x

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