This paper studies bidding behavior in a dynamic auction setting that is similar to auctions offered on the Internet. I allow bidders to acquire outside prices while the auction is in progress. Searching is costly and bidders are heterogeneous in their search costs. The model generates a tractable equilibrium and gives interpretation to three intuitive bidding patterns that are frequently observed in the data: early, late and multiple bidding. The key feature of the equilibrium is that early bidding is monotone in search cost which leads to efficient sorting.

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Keywords Dynamic auction, Information acquisition, Internet auction
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Journal International Journal of Industrial Organization
Vadovič, R. (2017). Bidding behavior and price search in Internet auctions. International Journal of Industrial Organization, 54, 125–147. doi:10.1016/j.ijindorg.2017.06.006