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Title: Shills and Snipes
Authors: Bose, Subir
Daripa, Arup
First Published: 3-Jun-2017
Publisher: Elsevier
Citation: Games and Economic Behavior, 2017, 104, pp.507-516
Abstract: Online auctions with a fixed end-time often experience a sharp increase in bidding towards the end (“sniping”) despite using a proxy-bidding format. We provide a novel explanation of this phenomenon under private values. We show that it is closely related to shill bidding by the seller. Late-bidding by buyers arises not to snipe each other, but to snipe the shill bids. We allow the number of bidders in the auction to be random and model a continuous bid arrival process. We show the existence of late-bidding equilibrium. Next, we characterize all equilibria under a natural monotonicity condition and show that they all involve sniping with positive probability. We characterize the time at which such late bidding occurs and discuss welfare implications.
DOI Link: 10.1016/j.geb.2017.05.010
ISSN: 0899-8256
Embargo on file until: 3-Dec-2018
Version: Post-print
Status: Peer-reviewed
Type: Journal Article
Rights: Copyright © 2017, Elsevier. Deposited with reference to the publisher’s open access archiving policy.
Description: The file associated with this record is under embargo until 18 months after publication, in accordance with the publisher's self-archiving policy. The full text may be available through the publisher links provided above.
Appears in Collections:Published Articles, Dept. of Economics

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