The effect of timing on jump bidding in ascending auctions

Anthony M. Kwasnica, Elena Katok

Research output: Contribution to journalArticle

39 Citations (Scopus)

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
StatePublished - Jul 1 2007

Fingerprint

Costs
Internet
Economics
Monitoring
Jump
Bidding
Auctions
Ascending auctions
Bid
Opportunity cost
Procurement
Internet auctions
Strategic decisions
Economic performance
Monitoring costs
Resources
English auction

All Science Journal Classification (ASJC) codes

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

Cite this

@article{5b678c37d76e4e4991527f4277674c06,
title = "The effect of timing on jump bidding in ascending auctions",
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.",
author = "Kwasnica, {Anthony M.} and Elena Katok",
year = "2007",
month = "7",
day = "1",
language = "English (US)",
volume = "16",
pages = "483--494",
journal = "Production and Operations Management",
issn = "1059-1478",
publisher = "Wiley-Blackwell",
number = "4",

}

The effect of timing on jump bidding in ascending auctions. / Kwasnica, Anthony M.; Katok, Elena.

In: Production and Operations Management, Vol. 16, No. 4, 01.07.2007, p. 483-494.

Research output: Contribution to journalArticle

TY - JOUR

T1 - The effect of timing on jump bidding in ascending auctions

AU - Kwasnica, Anthony M.

AU - Katok, Elena

PY - 2007/7/1

Y1 - 2007/7/1

N2 - 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.

AB - 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.

UR - http://www.scopus.com/inward/record.url?scp=34948890432&partnerID=8YFLogxK

UR - http://www.scopus.com/inward/citedby.url?scp=34948890432&partnerID=8YFLogxK

M3 - Article

AN - SCOPUS:34948890432

VL - 16

SP - 483

EP - 494

JO - Production and Operations Management

JF - Production and Operations Management

SN - 1059-1478

IS - 4

ER -