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Lowest-Unmatched Price Auctions

Eichberger, Jürgen and Vinogradov, Dmitri (2015) 'Lowest-Unmatched Price Auctions.' International Journal of Industrial Organization, 43 (C). pp. 1-17. ISSN 0167-7187

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Abstract

Lowest-Unmatched Price Auctions (LUPAs) specify that the lowest bid placed by only one participant wins. They are used in internet trading and TV and radio shows. We model LUPAs as games with minimal restrictions, in particular allowing players to place more than one bid, since multiple bids have been observed in most actual LUPAs. Though LUPAs are games for which a closed-form solution does not seem to exist in general, our model generates several testable implications about the type of strategies played in equilibrium and the highest bid in a given LUPA. Our analysis suggests that players follow strategic considerations and arrive at decisions which, at least in the aggregate, are generally consistent with theoretical predictions, yet there are some remarkable deviations.

Item Type: Article
Uncontrolled Keywords: Unmatched bid auction; Bidding behavior; Overbidding
Subjects: H Social Sciences > H Social Sciences (General)
H Social Sciences > HB Economic Theory
Divisions: Faculty of Social Sciences
Faculty of Social Sciences > Essex Business School
SWORD Depositor: Elements
Depositing User: Elements
Date Deposited: 31 Jul 2015 08:31
Last Modified: 18 Aug 2022 11:17
URI: http://repository.essex.ac.uk/id/eprint/14466

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