| Summary: | Theory predicts that when homogeneous goods are auctioned sequentially, to prevent intertemporal arbitrage the sale prices should exhibit no trend over time. Ashenfelter (1989) was the first to empirically test this hypothesis, and found that prices in wine auctions tended to decline throughout the day. We use transactionlevel data from wholesale fish auctions in the Faroe Islands to test for price trends using two methods: price-ratios and regression analysis. Both methods agree that prices in our data are declining. Furthermore, the pattern persists both on aggregate, and within individual fish species. We attribute the price decline to two main factors: the declining number of bidders, and the possibly declining quality of fish, throughout the day. Though the dataset logs each unit of the same fish-type as identical, early auction winners have the right to choose their preferred box before the rest is re-auctioned. This is likely to contribute to a decline in perceived fish quality in later auctions that is unobservable in the data, but possibly important in motivating bidder behaviour.
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