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"Bidding in Sequential Auctions: 'Catalogue' vs. 'Order of Sale' Effects"

George Deltas and Georgia Kosmopoulou


First Author :

George Deltas
University of Illinois at Urbana-Champaign
1206 S. Sixth Street, M/C 706
Champaign, IL 61820

Second Author :

Georgia Kosmopoulou
University of Oklahoma

Abstract :
This paper investigates bidding patterns in sequential auctions using data from a sale of rare books by a non-profit institution. The data has features of a field experiment: Lots were arranged in alphabetical order and the reserve was set non-strategically. Further, half the bids were placed by mail-in bidders for whom the auction was simultaneous in a temporal sense. The nature of the data allows us to distinguish between the effects induced by the sequential nature of the catalogue from those induced by the sequential nature of the sale. We estimate trends in the probability of sale, number of submitted bids, expected prices, and price variability separately for mail-in and floor bidders. We document the existence of distinct ‘catalogue’ effects on bidding trends and determine their causes. We demonstrate that these catalogue effects also influence floor bidder behavior. Taken together, our results show that (i) as the auction progresses, bidders become more aggressive in competing for some lots, but become disinterested in others, and (ii) bidding patterns in sequential auctions are a composite of ‘catalogue’ and ‘order of sale’ effects. The catalogue effects are of non-strategic nature, while the order-of –sale effects are possibly due to strategic behavior. Finally, we derive a theoretical model that is consistent with the empirical findings.
Manuscript Received : 2000
Manuscript Published : 2000
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