Auction Theory and Practice: Evidence from the Market of Jewellery

We consider data on jewellery sold in English public auctions between June 1993 and May 1994 at Crédit Municipal de Paris. We present the underlying model of this market derived from a "hedonic price equation". We then deal with experts’ estimate of pre-sales and find a strategic undervaluation by experts for the prices of almost all types of jewels. Finally, focusing on price dynamics during auctions, we find evidence of a "linkage principle" for watches (increasing effect), and an "afternoon effect" for objects in gold (declining effect). The fact that two
types of bidders (amateurs and professionals) coexist on this market may partly explain these results.