The case for last-second bidding
نویسنده
چکیده
Several recent empirical studies document the frequent occurrence of sniping the act of submitting last-second bids in online auctions. At rst glance, sniping would appear to be super uous, given the second-price structure of online auctions. This conclusion, however, neglects the sequential arrival of new auctions and the implicit option value of losing the current auction. The option is the expected surplus from bidding on subsequent auctions. By waiting until the last moment to bid, a bidder maximizes her information about the value of the surplus. Since a bid is binding, last-second bidding precludes her from being locked into a potentially suboptimal bid submitted earlier. To illustrate the dynamics of the model, I provide a quantitative solution for the option value. JEL Classi cation: C73, D44, D83
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تاریخ انتشار 2010