English, Article, Journal or magazine article edition: The buyer's option in multi-unit ascending auctions : the case of wine auctions at Drouot Février Philippe; Roos William; Visser Michael

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Bookmark: http://trove.nla.gov.au/version/12019
Physical Description
  • preprint
Language
  • English

Edition details

Title
  • The buyer's option in multi-unit ascending auctions : the case of wine auctions at Drouot
Author
  • Février Philippe
  • Roos William
  • Visser Michael
Physical Description
  • preprint
Notes
  • This paper studies multi-unit ascending (English) auctions with a buyer’s option. The buyer’s option gives the winner of an auction the right to purchase any number of units at the winning price. We develop a theoretical model and derive the optimal strategies for the bidders. The model predicts various behavioral implications (e.g., the winner never exercises the option, the price declines...) that are tested using a unique data set on wine auctions held at the Paris-based auction house Drouot. We also analyze why the buyer’s option is used. Estimating the model in a structural econometric way, and using counterfactual comparisons, we find that the buyer’s option does not affect the seller’s revenue (relative to a system where the units are auctioned sequentially without the option). Drouot, however, saves a lot of time with the option and this effect represents a considerable amount of money. The time saving effect seems thus to be the primary purpose of the buyer’s option.
  • buyer's option, multi-unit ascending auctions, wine auctions
  • RePEc:lea:leawpi:0409
Language
  • English
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