An Auction Price Anomaly: Evidence from Rose Auctions in China

Using data from rose auctions at the Kunming International Flower Auction (KIFA), this study analyzes price movements in sequential Dutch auctions to test whether the key finding of Van den Berg et al. (2001) remains true in the KIFA context. We find downward trend in prices in sequential auctions within the same lot, indicating the robustness of the finding of Van den Berg et al. (2001). The decreasing price pattern is consistent across different seasons, and price decline occurs more often in transactions conducted later in the day. The effect of the number of units remaining in a lot and the rank number of the transaction on price decline are also examined. Finally, we suggest that aversion to price risk and the presence of a buyer's option might cause the price decline.