Lower price increases, the bounded rationality of bidders, and underbidding concerns in online agricultural land auctions: The Ukrainian case

Auction theory suggests that bidders follow a dominant strategy is to submit the highest bid equal bidder's true valuation in an ascending price auction with independent and private values. Bidders real-world auctions may deviate from this strategy, resulting either underbidding—submitting bids lower than valuation—or overbidding—bidding amount excess of real value. This study utilises data collected online agricultural land lease Ukraine took place between October 2018 September 2019 analyse occurrence minimal increases, which indicate underbidding. It investigates if factors—auction property characteristics—that typically explain deviations strategy—can also bidding behaviours auctions. The estimation using heteroscedastic probit model reveals underbidding could reasonably be attributed low competition, insufficient time subsequent bid, very small increments, cumbersome entry fees.