This paper presents a software bidding agent that inserts fake bids on the seller’s behalf to inflate an auction’s price. This behaviour is referred to as shill bidding. Shill bidding is strictly prohibited by online auctioneers, as it defrauds unsuspecting buyers by forcing them to pay more for the item. The malicious bidding agent was constructed to aid in developing shill detection technique...

Online auctions with a fixed end-time often experience a sharp increase in bidding towards the end despite using a proxy-bidding format. We provide a novel explanation of this phenomenon under private values. We study a correlated private values environment in which the seller bids in her own auction (shill bidding). Bidders selected randomly from some large set arrive randomly in an auction, t...

Prospective payment encourages managed care organizations to select low-risk patients. This article models an entitlement program utilizing patient-level competitive bidding to mitigate risk selection. Three mechanisms are tested: uniform payment, pure bidding, and a mix of payment and bidding. Results show selection always occurs under optimal uniform payment, but never under either bidding me...

We analyze the realistic, popular format of an ascending auction with anonymous itemprices, when there are two items that are substitutes. This auction format entails increased opportunities for bidders to coordinate bids, as the bidding process is longer, and since bidders see the other bids and can respond to various signaling. This has happened in many real auctions, e.g., in the Netherlands...

In an electricity market, every generation company (GENCO) attempts to maximize profit according to other participants bidding behaviors and power systems operating conditions. The goal of this study is to examine the optimal bidding strategy problem for GENCOs in energy and spinning reserve markets based on a hybrid GA-heuristic optimization algorithm. The heuristic optimization algorithm used...

Online auctions are fast gaining popularity in today’s electronic commerce. Relative to offline auctions, there is a greater degree of multiple bidding and late bidding in online auctions, an empirical finding by some recent research. These two behaviors (multiple bidding and late bidding) are of “strategic” importance to online auctions and hence important to investigate. In this article we em...

Motivated by the practice of indicative bidding, which is commonly used in sales of complex and valuable assets, this paper develops a theory of two-stage auctions based on the assumption that learning valuation is costly. In various cases that characterize what can be learned in the due diligence stage, we show that no symmetric increasing equilibrium exists and hence efficient entry cannot be...

Second-price auctions are designed to induce people to reveal their private preferences for a good. Laboratory evidence suggests that while these auctions do a reasonable job on aggregate, they fall short at the individual level, especially for bidders who are off-margin of the market-clearing price. Herein we introduce and explore whether a random nth-price auction can engage all bidders to bi...

We correlate competitive bidding and profits in symmetric independent private value first-price auctions with salivary testosterone, estradiol, progesterone, and cortisol in more than 200 subjects. Females bid significantly higher and earn significantly lower profits than males. Moreover, females on hormonal contraceptives bid significantly higher and earn significantly lower profits than males...

Suppose bidders may publicly choose not to learn their values prior to a second-price auction with costly bidding. All equilibria with truthful bidding exhibit bidder ignorance when bidders are sufficiently few. Ignorance considerations also affect the optimal reserve price. JEL Codes: D44.