Pay-to-Bid Auctions

Brennan Platt, Joseph Price and Henry Tappen

No 15695, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We analyze a new auction format in which bidders pay a fee each time they increase the auction price. Bidding fees are the primary source of revenue for the seller, but produce the same expected revenue as standard auctions. Our model predicts a particular distribution of ending prices, which we test against observed auction data. Our model fits the data well for over three-fourths of routinely auctioned items. The notable exceptions are video game paraphernalia, which show more aggressive bidding and higher expected revenue. By incorporating mild risk-loving preferences in the model, we explain nearly all of the auctions.

JEL-codes: D44 D53 (search for similar items in EconPapers)
Date: 2010-01
Note: TWP
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

Published as The Role of Risk Preferences in Pay-to-Bid Auctions Autores: Brennan C. Platt, Joseph Price, Henry Tappen Localización: Management science: journal of the Institute for operations research and the management sciences, ISSN 0025-1909, Vol. 59, Nº. 9, 2013, págs. 2117-2134

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