Faculty of Economics and Business Administration Publications Database

Bidding behavior in sequential cattle auctions

Volume: 1
Number: 27
Pages: 33 - 42
Month: January
ISSN-Print: 0167-7187
Link External Source: Online Version
Year: 2009
Keywords: Sequential auctions; Private values; Secret reserve price; Multi-unit demand
Abstract: This paper studies the institutional characteristics of sequential cattle auctions and their effects on prices. It examines the effects of the order of sale according to quality, secret reserve prices, bidders'' multi-unit demands and certain characteristics of the bidders. Theory predicts declining prices when sellers are allowed to reject the outcome of the auction, and increasing prices when bidders demand more than one unit. I find evidence that observed declining prices are caused by the order of sale according to quality and the secret reserve prices. I also find that bidders consider the strategic effect of sequential auctions and multi-unit demand.