The effect of timing on jump bidding in ascending auctions

Anthony M. Kwasnica, Elena Katok

Research output: Contribution to journalArticle

39 Scopus citations

Abstract

We investigate the role Of timing in ascending auctions under the premise that time is a valuable resource. Traditional models of the English auction ignore timing issues by assuming that the auction occurs instantaneously. However, when auctions are slow, as Internet auctions used for procurement often are, there are significant opportunity or monitoring costs to bidders, and the choice of the size of the jump bid becomes a strategic decision. We study the choice in the experimental laboratory by systematically varying the opportunity costs associated with fast bidding. When time is more valuable bidders respond by choosing larger jump bids. Surprisingly, the economic performance of the auction is not significantly affected. We develop a simple model of ascending auctions with impatient bidders that provides insights into the effect jump bids have on auction performance.

Original languageEnglish (US)
Pages (from-to)483-494
Number of pages12
JournalProduction and Operations Management
Volume16
Issue number4
Publication statusPublished - Jul 1 2007

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All Science Journal Classification (ASJC) codes

  • Management Science and Operations Research
  • Industrial and Manufacturing Engineering
  • Management of Technology and Innovation

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