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Can Sniping in Internet Auctions be an Equilibrium Strategy?

Authors:

Atanu R. Sinha
Xavier Drèze
Michael A. Kamins
Valerie S. Folkes

Publisher:

Games and Economic Behavior
under review

Abstract:

Sniping is a bidding behavior that involves placing a bid in the closing moments of a fixed end-time Internet auction such as those on eBay. Ockenfels and Roth (2006) show sniping can be one of multiple equilibria in eBay type auctions under both private and dependent value assumptions. In a departure from these findings, we show that sniping is not an equilibrium strategy for eBay type auctions in the private value case and we provide more stringent conditions under which it is an equilibrium strategy in the dependent value model.