Bid credits in simultaneous ascending auctions

Research output: Contribution to journalArticlepeer-review

Abstract

I study the impact of bid credits on simultaneous ascending auctions in a model where bidders potentially have complementary values. Although bid credits can lead to a more equitable distribution of items, I find an additional unintended consequence: bidders without credits are more exposed to winning a less desirable set of items and will drop out of the auction sooner when their competitors have credits. Calibrating the model to data from the Federal Communication Commission's sale of licenses in the 700 MHz guard bands, I find exposure reduced average non-credited dropout values by 5.7 percent but did not decrease revenues.

Original languageEnglish
Pages (from-to)189-203
Number of pages15
JournalGames and Economic Behavior
Volume132
DOIs
StatePublished - Mar 2022

Bibliographical note

Funding Information:
I would like to thank Sushil Bikhchandani, Mo Xiao, Patrick Sun, Charles Courtemanche, Suqin Ge, Melinda Miller, Xu Lin, and participants at various conferences and seminars for their helpful comments.

Publisher Copyright:
© 2022 Elsevier Inc.

Keywords

  • Bid credits
  • Exposure problem
  • Simultaneous ascending auctions
  • Spectrum auctions

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

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