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Shill Bidding and Information in Sequential Auctions: A Laboratory Study

Ingebretsen Carlson, Jim LU and Wu, Tingting (2018) In Working Papers
Abstract
Second-price auctions with public information, such as those on eBay, provide an opportunity for sellers to use the information from finished and ongoing auctions when acting strategically in future auctions. Sellers have frequently been observed to bidding on their own item with the intent to artificially increase its price. This is known as shill bidding. Using lab experiments with two sequential auctions, we study the effect of shill bidding when the seller can choose to shill bid in the second auction. We also study the impact of different information revelation policies regarding the provision of the first auction bidding history to the seller. The experimental data confirm that shill bidding in the second auction affects outcomes in... (More)
Second-price auctions with public information, such as those on eBay, provide an opportunity for sellers to use the information from finished and ongoing auctions when acting strategically in future auctions. Sellers have frequently been observed to bidding on their own item with the intent to artificially increase its price. This is known as shill bidding. Using lab experiments with two sequential auctions, we study the effect of shill bidding when the seller can choose to shill bid in the second auction. We also study the impact of different information revelation policies regarding the provision of the first auction bidding history to the seller. The experimental data confirm that shill bidding in the second auction affects outcomes in both auctions. Our findings are consistent with the predictions that the threat of shill bidding in the second auction does increase the bidders' final bid in the first auction. However, providing the seller with the bidding history from the first auction does not affect any important outcome variables. (Less)
Please use this url to cite or link to this publication:
author
and
organization
publishing date
type
Working paper
publication status
published
subject
keywords
sequential auctions, shill bidding, experiment, C92, D03, D44
in
Working Papers
issue
2018:18
pages
55 pages
language
English
LU publication?
yes
id
718ef419-d0d6-4769-9167-bedb4acbf350
alternative location
https://swopec.hhs.se/lunewp/abs/lunewp2018_018.htm
date added to LUP
2018-08-01 10:24:14
date last changed
2018-11-21 21:40:58
@misc{718ef419-d0d6-4769-9167-bedb4acbf350,
  abstract     = {Second-price auctions with public information, such as those on eBay, provide an opportunity for sellers to use the information from finished and ongoing auctions when acting strategically in future auctions. Sellers have frequently been observed to bidding on their own item with the intent to artificially increase its price. This is known as shill bidding. Using lab experiments with two sequential auctions, we study the effect of shill bidding when the seller can choose to shill bid in the second auction. We also study the impact of different information revelation policies regarding the provision of the first auction bidding history to the seller. The experimental data confirm that shill bidding in the second auction affects outcomes in both auctions. Our findings are consistent with the predictions that the threat of shill bidding in the second auction does increase the bidders' final bid in the first auction. However, providing the seller with the bidding history from the first auction does not affect any important outcome variables.},
  author       = {Ingebretsen Carlson, Jim and Wu, Tingting},
  language     = {eng},
  note         = {Working Paper},
  number       = {2018:18},
  series       = {Working Papers},
  title        = {Shill Bidding and Information in Sequential Auctions: A Laboratory Study},
  url          = {https://swopec.hhs.se/lunewp/abs/lunewp2018_018.htm},
  year         = {2018},
}