Bidding behavior in a symmetric Chinese auction
This paper purposes a symmetric all-pay auction where the bidders compete neither for an object nor the object itself but for a lottery on receive. That lottery is determined endogenously through the bids. This auction is known as chance auction or more popularly as Chinese auction. The model consid...
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| Format: | Article |
| Language: | English |
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Emerald Publishing
2015-01-01
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| Series: | EconomiA |
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| Online Access: | http://www.sciencedirect.com/science/article/pii/S1517758015000077 |
| Summary: | This paper purposes a symmetric all-pay auction where the bidders compete neither for an object nor the object itself but for a lottery on receive. That lottery is determined endogenously through the bids. This auction is known as chance auction or more popularly as Chinese auction. The model considers the possibility that for some bidders the optimal strategy is to bid zero and to rely on luck. It showed that bidders become less aggressive when the lottery satisfies a variational condition. It was also shown that luck factor is decisive to determine if the expected payoff in Chinese auction is bigger or smaller than expected payoff in standard all-pay auction. |
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| ISSN: | 1517-7580 |