Jump bidding and overconcentration in decentralized simultaneous ascending auctions

A model of English auctions is proposed to incorporate the possibility of jump bidding. When two objects are sold separately via such auctions, bidders signal their willingness to pay via jump bids, thereby forming rational expectations of the prices without relying on any central mediator. Hence a multi-item bidder does not suffer the exposure problem of having to buy an item while he is uncertain about the price of its complement. Single-item bidders, however, free-ride one another in competing against a multi-item bidder. Consequently, the auctions overly concentrate the goods to a multi-item bidder and never overly diffuse them to single-item bidders. JEL Classification: D44, D82