Uncertainty and Auction Outcome: Evidence from Used Car Actions
26 Pages Posted: 6 Jun 2006
Date Written: April 15, 2006
I study the sequence of bidding in an open-outcry English auction to examine how uncertainty affects auction outcomes. I do this by analyzing a data set collected from a series of public auctions of used cars in New Jersey. I conjecture that the uncertainty is related to the auction's progress and demonstrate that, empirically, an increase in the uncertainty is associated with an increase in the number of rounds required to sell an object and with a reduction in the ratio between the selling price and the presale estimate.
JEL Classification: D44
Suggested Citation: Suggested Citation