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Absentee Bidders and the Declining Price Anomaly in Wine Auctions

Journal of Political Economy 1998 106(6), 1302-1319 open access
The anomaly is concerned with the observation that in multiple item auctions of identical objects, prices tend to decline over time. I show that in the case of wine auctions, which have been analyzed frequently, the anomaly is likely to be caused by the fact that most bids are entered by absentees, who use nonoptimal bidding strategies. Therefore, wine auctions can hardly be used to illustrate the standard multiple‐object auction model.