Bidding into bankruptcy: How auction order affects overbidding and losses

Global bidders in sequential auctions face exposure risk when bidding for complementary goods whose values differ in uncertainty. We study how auction order affects this risk in a sequential second-price auction with heterogeneous products, where one good has relatively high valuation variance and the other has low valuation variance. Motivated by simulation-based comparative statics in finite-variance environments, we use laboratory experiments to examine whether auctioning the low-variance good first increases the likelihood of ex-post losses for global bidders. We find that negative payoffs occur significantly more often when the low-variance product is sold first, across both low- and high-synergy environments. Efficiency and revenue are primarily driven by the level of synergy and are not systematically influenced by order. We also document systematic overbidding that depends on auction order and interim outcomes, with bidding behavior differing sharply depending on whether bidders win or lose the first product.