de Meza, David 
ORCID: 0000-0002-5638-8310 and Black, Julia ORCID: 0000-0002-5838-3265
(1992)
Price differences between successive auctions are no anomaly.
Journal of Economics and Management Strategy, 1 (4).
pp. 607-628.
ISSN 1058-6407
Abstract
Identical cases of wine are often auctioned one immediately after another. Ashenfelter (1989) reports that on average, the later lots fetch less. Such a systematic price difference seems anomalous, the more so because it is shown here that rational expectations imply not equal, but rising, prices. Risk aversion is an obvious way of reconciling the evidence with rational behavior. There is an alternative explanation. The auctions observed by Ashenfelter involved a buyer's option, whereby the first-round winner could purchase further cases at the same price. It is shown that this feature may both account for the observed price trajectory and raise seller revenue.
| Item Type: | Article |
|---|---|
| Official URL: | http://onlinelibrary.wiley.com/journal/10.1111/(IS... |
| Additional Information: | © 1992 Blackwell |
| Divisions: | Law Management Centre for Analysis of Risk & Regulation |
| Subjects: | H Social Sciences > HB Economic Theory |
| Date Deposited: | 06 May 2011 11:33 |
| Last Modified: | 01 Oct 2024 03:29 |
| URI: | http://eprints.lse.ac.uk/id/eprint/35756 |
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