Strategic Jump Bidding in English Auctions

This paper solves for equilibria of sequential bid (or English) auctions with affiliated values when jump bidding strategies may be employed to intim-idate one’s opponents. In these equilibria, jump bids serve as correlating devices which select asymmetric bidding functions to be played subse-quently. Each possibility of jump bidding provides a Pareto improvement for the bidders from the symmetric equilibrium of a sealed bid, second-price auction. The expanded set of equilibria can approximate either first or second-price outcomes and produce exactly the set of expected prices between those two bounds. These results contrast with standard conclu-sions that equate English and second-price auctions.