Last-Minute Bidding in Sequential Auctions with Unobserved, Stochastic Entry

We present a model of repeated, ascending price auctions for homogeneous goods with unobserved, stochastic entry. Bidders have unit demands; they exit if they win, and bid again if they lose. We show that, in equilibrium, entrants always bid in the next-toclose auction and bidders always bid at the last minute. The more bidders present, the lower is the continuation value of future auctions, so bidders avoid revealing themselves until the end of the auction. Using a dataset of calculator auctions on eBay, we present evidence that losers of an auction bid again in future auctions. Ordering the auctions by closing time, we show that last-minute bidding is not merely the result of bidders going to the next-to-close auction. Instead, bidding is concentrated at the end of the period in which the auction is the next to close.