English Auction Research Articles

Rational Bidding Meets Emotional Viewing: The Landscape of English Auction Livestreams in The Age of Algorithms

Rational Bidding Meets Emotional Viewing: The Landscape of English Auction Livestreams in The Age of Algorithms

Starting high or low in English auctions? The case of frozen saithe in Norway

AbstractThis study investigates the role of starting prices in sequentially ascending (English) auctions. Applying binary logit and hedonic price models on a unique data set comprising 8217 auctioned lots of frozen saithe, an important species in Norwegian fisheries, we find support for three hypotheses; that low starting prices will lead to a higher share of successful auctions, a higher number of participating bidders, and higher final prices. These results indicate that starting prices in English auctions are important for both seller revenue and auction efficiency and are important with respect to strategic behavior in auction markets for food commodities.

Information Asymmetry and Bidding Behavior in Common Value English Auction

Information Asymmetry and Bidding Behavior in Common Value English Auction

Bidding efficiently in Simultaneous Ascending Auctions with budget and eligibility constraints using Simultaneous Move Monte Carlo Tree Search

Bidding efficiently in Simultaneous Ascending Auctions with budget and eligibility constraints using Simultaneous Move Monte Carlo Tree Search

Identification in english auctions with shill bidding

Identification in english auctions with shill bidding

Nonparametric estimation of English auctions with selective entry: An application to online judicial auctions

AbstractThis paper proposes an estimation approach following the constructive identification strategy of Athey and Haile, and Gentry and Li with adaption in the context of ascending auctions with selective entry. Our estimators are shown to be consistent in a large sample and to perform well in a finite sample by a simulation study. We apply our estimation approach to the Alibaba online judicial auctions of used cars to recover the bounds of conditional value distribution and the entry cost. The bounds estimates of both conditional value distribution and entry cost are quite tight (resp., relatively wide) for middle‐valued (resp., low‐valued or high‐valued) signal, and the cumulative distribution functions of conditional value distribution given signal comply with the law of ordered dominance. Finally, our counterfactual analysis indicates that (i) the ascending auction yields a higher revenue than the first‐price sealed bid auction, and (ii) the revenue can be improved significantly when the entry cost is cut by half.

Auction design and order of sale with budget-constrained bidders

The presence of financial constraints changes traditional auction theory predictions. In the case of multiple items, such constraints may affect revenue equivalence and efficiency of different auction formats. We consider a simple complete information setting with three financially constrained bidders and two items that have different values common to all the bidders. Using a laboratory experiment, we find that, as predicted by theory, it is more beneficial for the seller to sell the higher value item first. We then show that the first-price sealed-bid auction yields higher revenue than the English auction, with significant differences in learning of equilibrium strategies.

Application of Game Theory in Different Auction Forms

Auctions are employed in many areas all across the world. It is a key topic of study in game theory. This article primarily summarizes the winning strategies in auctions from a game theory perspective. To examine this issue, this paper reviews the past literature from three auction angles. The winning strategies applied in English auctions, Dutch auctions, and first-price auctions will differ depending on the form of auction. During a customary English auction, the winning strategy is to bid at their genius willingness. However, when multiple goods and deadlines are added to the auction, the winning strategy becomes to bid lower than the valuation. In Dutch auctions, bidders should bid at the beginning at a lower price. In first-price auctions, bidders should bid for all combinations when there are many items, and overbid when there is standard information feedback. This article is a review of previous relevant articles and provides references to related articles.

The effect of experienced regret based on gender differences in auction

This study aims to show how experiencedregret influences the decisions made by bidders of differentgenders in an auction. - In this paper, the data is collected through a real-time recorded tv show about English auctions. In previous studies, female participants tend to be more risk-sensitive and rational than male bidders. Based on this trend, we hypothesized that female bidders would make quick decisions compared to male bidders after the bidder experience regret.

Revenue implications of choosing discrete bid levels in a Japanese–English auction

We consider the set-up of a Japanese–English auction with exogenously fixed discrete bid levels for a specific game (the wallet game with two bidders, following Gonçalves and Ray in Econ Lett 159:177–179, 2017). We show that in this auction, partition equilibria exist that may be separating or pooling. We illustrate separating and pooling equilibria in games with two and three discrete bid levels and compare the revenues of the seller from these equilibria to find the optimal bid levels for these cases.

Reserve Prices and Bidder Participation in an English Auction: The Case of Atlantic Cod in Norway

This study investigates the impact of reserve prices on bidder participation in the main Norwegian auction market for frozen Atlantic cod. Theoretically, there is a negative relationship between reserve prices and bidder participation. However, our empirical findings show that the reserve price actually has no negative influence on bidder participation. A simulation exercise taking buyers’ true valuations into account also shows a negligible effect of reserve prices on the probability of two or more participating bidders. Other factors are more important in attracting bidders to the auction. Most notably, cod caught by longline, which implies fish of high quality, enhances the probability of two or more bidders by 11.8%. Auctioneers should focus on information transparency regarding fish quality to attract participants and hence improve the efficiency of auction markets.

Misbehavior in Common Value Auctions: Bidding Rings and Shills

We characterize the optimal misbehavior by bidding rings or an auctioneer in the ascending English auction with common values. We also show, in an extended game, that in equilibrium potential members join and truthfully reveal their signals. Under a separability assumption, behavior does not change if nonring bidders are informed about the ring’s existence. In general, misbehavior in dynamic settings is more profitable than in outcome-equivalent static settings. However, under a stronger separability assumption, the ring can do no better in the dynamic English format than in the outcome-equivalent, static Sophi format. (JEL D44, D82)

A Two-Stage Matching Game and Repeated Auctions for Users Admission and Channels Allocation in 5G HetNets

The fifth-generation (5G) wireless cellular networks aim to increase the users’ capacities and quality of experience as well as to integrate different wireless bands and modes of access. The introduction of cognitive radio technology and heterogeneous networks (HetNets) as part of the architecture of the 5G aims to efficiently reuse the available spectrum. This paper presents a two-stage framework based on matching theory and auction games with the objective of efficiently admitting secondary users to the wireless scene. In the first stage, a fast convergence matching game for the users admission problem in 5G HetNets is considered, where secondary users are associated to appropriate secondary base stations. These base stations access the available primary spectrum on behalf of its associated users in the next stage, namely a repeated modified English auction. Results show the existence of a stable matching point for the users admission game and a Walrasian equilibrium point for the repeated auctions. In addition, extensive simulations are performed to compare the proposed repeated auction against the single auction and the matching theory. It is proven that the repeated auction game outperforms the single auction game and matching game in terms of the occupancy of primary channels and the satisfaction of the secondary users.

Teams and individuals in standard auction formats: decisions and emotions

Our study compares individual and team bidding in standard auction formats: first-price, second-price and ascending-price (English) auctions with independent private values. In a laboratory experiment, we find that individuals overbid more than teams in first-price auctions and deviate more from bidding their own value in second-price auctions. However, we observe no difference in bidding behavior in English auctions. Based on control variables, we provide evidence that the observed difference could be explained by better reasoning abilities of teams. Emotions seem to play a role in determining bids, but the effect of emotions on bidding does not differ between individuals and teams.

Identification of English auctions when losing entrants are not observed

A typical feature of English auctions and negotiated-price markets modeled as English auctions is that only the transaction price and identity of the winner are observed; auction entrants other than the winner are commonly not recorded in the data. Meanwhile, existing identification results for independent private values, including Athey and Haile (2002), require that the set of entrants be observed. This paper fills the gap by establishing nonparametric identification of asymmetric bidders’ value distributions when losing entrants are not observed, under a general class of entry models in which each potential entrant enters the auction with some bidder-specific probability.

Applications of Game Theory in Microeconomics

Game theory has been used as a potent analytical tool by numerous areas since its inception. It has been more popular in microeconomic analysis in recent years. It is not an exaggeration to claim that it completely rewrites microeconomics. The major ideas of game theory are summarized in this paper, as well as their application in microeconomics. This study examines the three elements and key types of game theory in its fundamental material. The Nash equilibrium and other equilibria expanded by Nash equilibrium are then reviewed in game theory equilibrium. Then, the Cournot model, Stackelberg model, and Bertrand model are discussed in game theory and market analysis. Finally, in the section on game theory and auction, it explained that, within the context of the game, English auctions and second-price sealed-bid auctions should use comparable strategies, however Dutch auctions and first-price sealed-bid auctions should conceal their own valuations.

Online hybrid Dutch auction approach for selling toxic assets under asymmetric bidders and the possibility of collusion

The COVID-19 pandemic-related economic recession causes a noticeable risk to banks with a substantial increase in toxic assets, including non-performing loans (NPLs). Despite the downsides, the pandemic is accelerating the spread of e-commerce. The best and most effective solution for resolving toxic assets would be a well-designed auction. Due to the fact, this represents a significant opportunity to tackle the next wave of NPLs via e-auctions. This study aims to model, for the first time, the Hybrid Dutch Auction (HDA) for online selling of NPLs. The HDA includes Dutch, Sealed-bid, and Best bid stages, and their equilibria are derived via backward induction. Theoretically and with a simulation, the study compares the HDA with the Amsterdam, the optimal auction, and the first-price and English auctions in symmetric and asymmetric environments. The results indicate that the HDA outperforms the other formats under different competition levels and the possibility of collusion.

Why are open ascending auctions popular? The role of information aggregation and behavioral biases

The popularity of open ascending auctions is often attributed to the fact that openly observable bidding allows to aggregate dispersed information. Another reason behind the frequent utilization of open auction formats may be that they activate revenue enhancing biases. In an experiment, we compare three auctions that differ in how much information is revealed and in the potential activation of behavioral biases: (i) the ascending Vickrey auction, a closed format; and two open formats, (ii) the Japanese–English auction, and (iii) the Oral Outcry auction. Even though bidders react to information conveyed in others' bids, information aggregation fails in both open formats. In contrast, the Oral Outcry raises higher revenue than the other two formats by stimulating bidders to submit unprofitable jump bids and triggering a quasi‐endowment effect.

Optimal equity auction with interdependent valuations

This study considers a seller using an equity auction to sell an indivisible asset for which bidders have interdependent valuations. First, we introduce bidders’ conditional virtual valuations for this setting, and identify sufficient conditions for conditional virtual valuations’ monotonicity and single-crossing property. Then, we characterize the optimal equity mechanism, which is ex post incentive compatible and individually rational. In general symmetric case, English equity auction or two-round sealed bid equity auction with an endogenous take-it-or-leave-it contract can implement the optimal ex post equity auction; in asymmetric case, English auction with an endogenous discriminatory equity contract could be constructed for the implementation of the optimal ex post equity auction under certain conditions.

Incomplete Contracts in Multi-period Procurement

We analyze the problem of a buyer who purchases a long-term project from one of several suppliers. A changing state of the world influences the costs of the suppliers. We distinguish between complete contracts conditioning on all future realizations of the state of the world and incomplete contracts renegotiated whenever the state of the world changes. We provide conditions such that incomplete contracting does not pose a problem. If the changing state of the world is publicly observable and the buyer cannot switch between suppliers during the lifetime of the project, the buyer achieves the same surplus irrespective of whether contracts are complete or incomplete. An English auction followed by renegotiation whenever the state of the world changes is optimal. To identify conditions when buyers should consider drafting complete contracts, we extend the analysis by considering private information about the changing state of the world and supplier switching. In both cases, incomplete contracting poses a problem. In a survey of procurement consultants, we confirm that publicly observable states of the world via price indexes play an important role in procurement. Moreover, the consultants confirm that supplier switching is infrequent in procurement practice. Thus, incomplete contracting is less of a problem in a considerable share of procurement projects. However, complete contracts are useful and could be used more often. This paper was accepted by Yan Chen, behavioral economics and decision analysis.