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The Declining Price Anomaly Is Not Universal in Multi-buyer Sequential Auctions

CIREQ-Concordia Seminar 2019-2020
joint with the Department of Economics, Concordia University

room H-1145 (Concordia University, 1455 de Maisonneuve Blvd West, 11th floor)

OrganizerHuan Xie (Concordia U.)


 

Résumé

The declining price anomaly states that the price weakly decreases when multiple copies of an item are sold sequentially over time. The anomaly has been observed in a plethora of practical applications. On the theoretical side, Gale and Stegeman (2001) proved that the anomaly is guaranteed to hold in full information sequential auctions with exactly two buyers. We prove that the declining price anomaly is not guaranteed in full information sequential auctions with three or more buyers. This result applies to both first-price and second-price sequential auctions, and applies regardless of the tie-breaking rule used to generate equilibria in these sequential auctions. Our results are based upon a refined study of subgame perfect equilibria that survive the iterative deletion of weakly dominated strategies in sequential auctions.

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