A Model for the Distribution of the Number of Bidders in an Auction

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Discussion Paper

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The distribution of the number of bidders in auctions with uncertain numbers is usually assumed to be Poisson. The observed distribution, for example in OCS Federal Offshore Oil Lease Sales, is apparently not Poisson. A simple model is presented showing that if the objects have different values and individuals tend to only bid on objects with high value, then the resulting distribution of the number of bidders will not be Poisson. The results of the model correspond closely to data observed in Federal Offshore Oil lease auctions and the model is simple enough so that it may be of practical use to an individual participating in such an auction.

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