Defensive Sniping and Efficiency in Simultaneous Hard-Close Proxy Auctions

Posted: 20 May 2008 Last revised: 24 Feb 2015

See all articles by Greg Taylor

Greg Taylor

University of Oxford - Oxford Internet Institute

Date Written: October 1, 2009

Abstract

A well-known myopic bidding strategy fails to support an equilibrium of simultaneous ascending proxy auctions for heterogeneous items when a hard-close rule is in place. This is because, in common with the single-auction case, last minute bidding (sniping) is a best response to naïve behaviour. However, a modification to the myopic strategy in which all bidders submit an additional bid in the closing stages of the auction — a practice I call 'defensive sniping' — is shown to yield an efficient, belief-free equilibrium of such environments. This equilibrium is essentially unique within the class of belief-free, efficient equilibria.

Keywords: auctions, sniping, ebay, amazon, hard close, bid timing

JEL Classification: D44, C73, C90

Suggested Citation

Taylor, Greg, Defensive Sniping and Efficiency in Simultaneous Hard-Close Proxy Auctions (October 1, 2009). Journal of Mathematical Economics, Vol. 48, No. 1, 2012. Available at SSRN: https://ssrn.com/abstract=1133520

Greg Taylor (Contact Author)

University of Oxford - Oxford Internet Institute ( email )

1 St. Giles
University of Oxford
Oxford OX1 3PG Oxfordshire, Oxfordshire OX1 3JS
United Kingdom

HOME PAGE: http://www.greg-taylor.co.uk

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