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Abstract:
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The online auction market has been growing at a spectacular rate. Most auctions are open-bid auctions where all the participants know the current highest bid. This knowledge has led to a phenomenon known as sniping, whereby some bidders may wait until the last possible moment before bidding, thereby depriving other bidders of the opportunity to respond and also preventing sellers from obtaining the highest price for an item. This is especially true in the case of a second price, fixed deadline auction. We develop a procedure involving a randomly determined, yet finite, end-time, which eliminates the potential benefits to a sniper. The scheme enables all bidders to compete on a more equal footing and promotes an early bidding strategy, which is expected to increase the price received by the seller.
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