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Shills and Snipes

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journal contribution
posted on 02.11.2017, 12:27 by Subir Bose, Arup Daripa
Online auctions with a fixed end-time often experience a sharp increase in bidding towards the end (“sniping”) despite using a proxy-bidding format. We provide a novel explanation of this phenomenon under private values. We show that it is closely related to shill bidding by the seller. Late-bidding by buyers arises not to snipe each other, but to snipe the shill bids. We allow the number of bidders in the auction to be random and model a continuous bid arrival process. We show the existence of late-bidding equilibrium. Next, we characterize all equilibria under a natural monotonicity condition and show that they all involve sniping with positive probability. We characterize the time at which such late bidding occurs and discuss welfare implications.

History

Citation

Games and Economic Behavior, 2017, 104, pp.507-516

Author affiliation

/Organisation/COLLEGE OF SOCIAL SCIENCES, ARTS AND HUMANITIES/Department of Economics

Version

AM (Accepted Manuscript)

Published in

Games and Economic Behavior

Publisher

Elsevier

issn

0899-8256

Acceptance date

27/05/2017

Copyright date

2017

Available date

03/12/2018

Publisher version

http://www.sciencedirect.com/science/article/pii/S0899825617300945

Notes

The file associated with this record is under embargo until 18 months after publication, in accordance with the publisher's self-archiving policy. The full text may be available through the publisher links provided above.

Language

en

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