Abstract
We run experiments on second-price auctions with resale opportunities, where a zero-value bidder, called a speculator, is commonly known to exist. Garratt and Tröger (2006a) show that there is a continuum of speculative equilibria, apart from the standard bid-your-value one, in which the speculator gets the good in the first stage auction with positive probability. She pays a price of zero and resells it to the private-value bidder in the second stage. In the most extreme equilibrium, the private-value bidder always bids zero and the speculator obtains the good. We find that bidders frequently play strategies that are consistent with a speculative equilibrium. When the speculative equilibrium is not observed, the presence of the speculator leads to more aggressive bidding by private-value bidders that results in increased revenue for the seller. An increase in the number of private-value bidders makes speculation harder, but does not eliminate it.
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