Auctions with speculators: An experimental study

Garratt, Rodney; Georganas, Sotiris

doi:10.1016/j.geb.2021.03.004

Cited by 4 publications

(4 citation statements)

References 26 publications

(30 reference statements)

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“…That resale has an ambiguous effect on expected revenue has been well‐documented in other auction settings with resale (e.g., Haile, 2003; Pagnozzi, 2007; Xu et al, 2012). This contradicts earlier findings that resale increases the seller's expected revenue, as demonstrated by Hafalir and Krishna (2009), Akyol (2019), and Garratt and Georganas (2021), for example.…”

Section: Welfare Analysiscontrasting

confidence: 90%

“…The literature on auctions with resale provides six main reasons for resale: (i) New information regarding the values of objects arrives after the auctions (Haile, 2000, 2001, 2003; Gupta & Lebrun, 1999), (ii) new buyers arrive after the auction is over (Bose & Deltas, 2007; Bukhchandani & Huang, 1989; Haile, 2003), (iii) asymmetry in the auction may lead to inefficient allocation (Cheng & Tan, 2010; Hafalir & Krishna, 2008; Lebrun, 2010a, 2010b), (iv) presence of speculators in the auction (Garratt & Georganas, 2021; Pagnozzi, 2007, 2009), (v) coordination on collusive outcome (Garratt et al, 2009), and (vi) the existence of participation costs may lead to inefficient allocation (Akyol, 2019, 2021; Celik & Yilankaya, 2017; Che & Klumpp, 2016; Xu et al, 2013). Our setup is closest to the sixth type.…”

Section: Introductionmentioning

confidence: 99%

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Resale in second‐price auctions with private entry

Cao

Yang

2023

Manage Decis Econ

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This paper investigates the effects of resale on bidders' entry decisions, social welfare, and seller's expected revenue in a second‐price auction with two‐dimensional private information on values and participation costs. We establish the existence of symmetric entry equilibrium and identify sufficient conditions under which the equilibrium is unique. We show that when resale is allowed, the low‐cost bidders become more aggressive on entry, while the high‐cost bidders are less likely to enter. Furthermore, our analysis also suggests resale allowance can increase the social welfare under a sufficient condition, which depends on the magnitude of bargaining power, and its effect on expected revenue is ambiguous.

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Section: Welfare Analysiscontrasting

confidence: 90%

Section: Introductionmentioning

confidence: 99%

Resale in second‐price auctions with private entry

Cao

Yang

2023

Manage Decis Econ

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“…Tat resale has an ambiguous efect on expected revenue which has been well-documented in other auction settings with resale (e.g., [16,18]; it can be explained intuitively in our setting based on the competition efect and the displacement efect induced by resale opportunities. Tis contradicts earlier fndings that resale increases the seller's expected revenue, as demonstrated by Hafalir and Krishna [15], Akyol [3], and Garratt and Georganas [17].…”

Section: Proposition 5 Assume That Each Bidder's Participation Cost I...mentioning

confidence: 75%

Equilibrium and Welfare Analysis in Second‐Price Auctions with Resale and Costly Entry

Cao

Yang

et al. 2022

Discrete Dynamics in Nature and Society

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This study investigates the effects of resale allowance on entry strategies, seller’s expected revenue, and social welfare in a second-price auction with two-dimensional private information on values and participation costs. We characterize the perfect Bayesian equilibrium in cutoff strategies and identify sufficient conditions under which the equilibrium is unique. Our analysis suggests that resale allowance leads the low-value bidder to become more aggressive on entry, while high-value bidder has a lower incentive to enter. Furthermore, the allowance of resale can increase the social welfare under a sufficient condition, and its effect on expected revenue is ambiguous.

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“…Pagnozzi (2010) studies speculation in complete information multi-object auctions with resale and whether the presence of speculators helps raise the auctioneer's revenue. Saral (2012), Pagnozzi and Saral (2019), and Garratt and Georganas (2021) experimentally study the effects of speculation driven by post-auction resale. Also related to this paper is the bidder collusion literature, which focuses on bidders' endeavors to reduce prospective competition in the auction.…”

Section: Related Literaturementioning

confidence: 99%

Speculation in Procurement Auctions

Deng¹

2022

Preprint

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A speculator can take advantage of a procurement auction by acquiring items for sale before the auction. The accumulated market power can then be exercised in the auction and may lead to a large enough gain to cover the acquisition costs. I show that speculation always generates a positive expected profit in second-price auctions but could be unprofitable in first-price auctions. In the case where speculation is profitable in first-price auctions, it is more profitable in second-price auctions. This comparison in profitability is driven by different competition patterns in the two auction mechanisms.In terms of welfare, speculation causes private value destruction and harms efficiency.Sellers benefit from the acquisition offer made by the speculator. Therefore, speculation comes at the expense of the auctioneer.

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Auctions with speculators: An experimental study

Cited by 4 publications

References 26 publications

Resale in second‐price auctions with private entry

Resale in second‐price auctions with private entry

Equilibrium and Welfare Analysis in Second‐Price Auctions with Resale and Costly Entry

Speculation in Procurement Auctions

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