On organizing a sequential auction: results from a natural experiment by Christie's

In empirical studies of sequential auctions of identical objects prices have been found to decline. We study three ascending price auctions of ancient Chinese porcelain recovered from shipwrecks, in which there are very long sequences of lots containing the same number of identical objects. In the three auctions different setups were used. We exploit these 'natural experiments' to examine whether some sequences generate more revenue than others. Our results point to the fact that a sequence of lots each of which contains the same numbers of items generates more revenue than lots with varying numbers of items. We also find that over a sequence of lots hammer prices decline and converge to some limit value, which is larger than the pre-sale estimate in the first two sales, and is equal to the pre-sale estimate in the third one.