Jump Bidding in Takeover Auctions: An Experimental Study
Yuri Khoroshilov*
Date: 2010-05-21 12:30 pm – 1:00 pm
Last modified: 2010-05-17
Abstract
This paper presents experimental analysis of jump bidding in English auctions with entry costs. It provides support for the signaling hypothesis behind jump bidding and analyzes how the size of the entry costs affects the bidders’ behavior. It also shows that jump bidding does not affect the total surplus but allows the reallocation of the surplus from the seller to the bidders. In addition, it shows that the first bidder has an advantage over the second bidder and, on average, enjoys a higher surplus.