Slow Dutch Auctions

Theorists have long believed that Dutch auctions are strategically equivalent to standard sealed bidding. However, recently in controlled experiments with actual Dutch and sealed bid Internet auctions of collectables, the Dutch auctions produced significantly more revenue. We believe that this happened, in part, because the Internet Dutch auctions are a slow process in which bidders incur incremental transaction costs if they delay bidding. This paper presents models of slow Dutch auctions that include these costs and explain this belief. Acknowledgements: We thank Colin Campbell, Ronald M. Harstad and Martin K. Perry for useful comments.