Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/296420 
Authors: 
Year of Publication: 
2023
Citation: 
[Journal:] Theoretical Economics [ISSN:] 1555-7561 [Volume:] 18 [Issue:] 2 [Year:] 2023 [Pages:] 561-596
Publisher: 
The Econometric Society, New Haven, CT
Abstract: 
I analyze sequential auctions with expectations-based loss-averse bidders who have independent private values and unit demand. Equilibrium bids are history dependent and subject to a discouragement effect: the higher the winning bid in the current round is, the less aggressive the bids of the remaining bidders in the next round. Moreover, because they experience a loss in each round in which they fail to obtain an object, bidders are willing to pay a premium in order to win sooner rather than later. This desire to win earlier leads prices to decline in equilibrium. I also show how various disclosure policies regarding the outcome of earlier auctions affect equilibrium bids, and that sequential and simultaneous auctions are neither bidder-payoff equivalent nor revenue equivalent.
Subjects: 
afternoon effect
Loss aversion
sequential auctions
JEL: 
D03
D44
D81
D82
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by-nc Logo
Document Type: 
Article

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