Hugo Hopenhayn: “Dynamic Bidding in Second Price Auctions”
19 de mayo de 2016
De 11.00 a 13.30 h
De 11.00 a 13.30 h
Sala de Seminarios, Santa Teresa
We develop a dynamic model of biddings in second price auctions where agents bidding opportunities and values follow a joint Markov process. We prove that equilibrium exists and is unique, providing a recursive representation and algorithm to solve for bids as a function of time and values. The equilibrium bid equals the expected final value conditional on being the bidder’s final one: either there is no further rebidding opportunity or the bidder chooses not to increase this bid if given the option. This results in adverse selection with respect to a bidder’s own future values, and as a result bids are shaded. This is true in spite of values being independent across bidders. Under mild conditions, desired bids increase as time increases and the close of the auction is approached. Our results are consistent with repeated bidding and sniping, two puzzling observations in eBay auctions. We estimate the model by matching moments from eBay auctions and consider a series of counterfactuals.
Organiza: CIE