Bid-spread

Analysis of the difference between the lowest and second lowest bids, or bi d-spread, in a "lowest wins" auction is of possible value in strategic bidd ing, providing an indication of mistakes in bids, determining a justifiable amount of bid security, and a means of providing some insight into the con sequences of nontraditional auction arrangements. Bid-spread analysis, as d eveloped in this paper, provides some explanations concerning the nature of bids and their statistical properties. In particular, it is shown here tha t, through the analysis of several data sets originating in various parts o f the world the percentage bid-spread is consistent with the assumption tha t bids are entirely random, being drawn from a lognormal distribution.