Defensive sniping and efficiency in simultaneous hard-close proxy auctions

Journal article

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 naive 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.

Authors: Taylor, G

• Publication status: Published
• Peer review status: Peer reviewed
• Publisher: Elsevier
• Journal: Journal of Mathematical Economics
• Volume: 48
• Issue: 1
• Pages: 51-58
• Publication date: 2012-01-01
• DOI: 10.1016/j.jmateco.2011.11.006
• ISSN: 0304-4068
• Keywords: Myopic bidding; Belief-free; Simultaneous proxy auctions; Hard-close; Efficiency