Scandinavian Working Papers in Economics

Working Papers,
Lund University, Department of Economics

No 2015:28: Decomposing the Afternoon Effect: An Empirical Investigation of Sequential Train Ticket Auctions

Ola Andersson () and Tommy Andersson ()
Additional contact information
Ola Andersson: Research Institute of Industrial Economics, Postal: Research Institute of Industrial Economics, Box 55665, SE-102 15 Stockholm, Sweden
Tommy Andersson: Department of Economics, Lund University, Postal: Department of Economics, School of Economics and Management, Lund University, Box 7082, S-220 07 Lund, Sweden

Abstract: The afternoon effect, i.e., that prices in a sequence of auctions with identical items are decreasing with the order in which the auctions are terminated, is a frequently observed phenomenon in empirical auction studies. Using an unsurpassed amount of data from sequential online train ticket auctions, we investigate two hitherto unexplored dimensions inherent in sequential auctions, namely, the timing of auction ends and the presentation order of the auctions in a sequence. We find that both these dimensions are important for price formation in sequential auctions, but even when controlling for them, a sizable afternoon effect remains.

Keywords: sequential auctions; afternoon effect; presentation order; timing

JEL-codes: D02; D44

12 pages, September 30, 2015

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