Advanced Search
MyIDEAS: Login to save this article or follow this journal

An Experimental Comparison of Sequential First- and Second-Price Auctions with Synergies

Contents:

Author Info

  • Leufkens Kasper

    ()
    (Department of Economics, Maastricht University, Maastricht, The Netherlands)

  • Peeters Ronald

    ()
    (Department of Economics, Maastricht University, Maastricht, The Netherlands)

  • Vorsatz Marc

    ()
    (Departamento de Análisis Ecónomico II, Universidad Nacional de Educación a Distancia, Madrid, Spain)

Abstract

Using laboratory experiments, we compare the performance of first-price and second-price auctions when two stochastically equivalent objects are auctioned sequentially and the winner of the first auction receives a positive synergy in the second auction. According to the risk-neutral subgame perfect Nash equilibrium, the second-price auction provides more efficiency and a higher revenue to the seller, but a lower ex ante expected payoff to the bidders. Our experimental data indicate precisely the opposite results for format comparisons: the first-price auction gives rise to larger levels of efficiency and revenue, but lower payoffs to the bidders. Despite the lower payoff, the likelihood of an ex post loss is also smaller under the first-price auction. Our results therefore support the common use of the first-price auction in governmental and business-to-business procurements.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.degruyter.com/view/j/bejte.2012.12.issue-1/1935-1704.1608/1935-1704.1608.xml?format=INT
Download Restriction: For access to full text, subscription to the journal or payment for the individual article is required.

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Bibliographic Info

Article provided by De Gruyter in its journal The B.E. Journal of Theoretical Economics.

Volume (Year): 12 (2012)
Issue (Month): 1 (January)
Pages: 1-28

as in new window
Handle: RePEc:bpj:bejtec:v:12:y:2012:i:1:n:2

Contact details of provider:
Web page: http://www.degruyter.com

Order Information:
Web: http://www.degruyter.com/view/j/bejte

Related research

Keywords:

Other versions of this item:

Find related papers by JEL classification:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Lawrence M. Ausubel & Peter Cramton & R. Preston McAfee & John McMillan, 1998. "Synergies in Wireless Telephony: Evidence from the Broadband PCS Auctions," Papers of Peter Cramton 97jems, University of Maryland, Department of Economics - Peter Cramton, revised 09 Jun 1998.
  2. Dakshina G. De Silva, 2005. "Synergies in Recurring Procurement Auctions: An Empirical Investigation," Economic Inquiry, Western Economic Association International, vol. 43(1), pages 55-66, January.
  3. Beggs, A. & Graddy, K., 1996. "Declining Values and the Afternoon Effect: Evidence from Art Auctions," Economics Series Working Papers 99184, University of Oxford, Department of Economics.
  4. Branco, Fernando, 1997. "Sequential auctions with synergies: An example," Economics Letters, Elsevier, vol. 54(2), pages 159-163, February.
  5. repec:feb:framed:00135 is not listed on IDEAS
  6. Ashenfelter, O. & Genesove, D., 1992. "Testing for Price Anomalies in real Estate Auctions," Papers 128, Princeton, Department of Economics - Financial Research Center.
  7. De Silva, Dakshina G. & Jeitschko, Thomas D. & Kosmopoulou, Georgia, 2005. "Stochastic synergies in sequential auctions," International Journal of Industrial Organization, Elsevier, vol. 23(3-4), pages 183-201, April.
  8. Ashenfelter, Orley, 1989. "How Auctions Work for Wine and Art," Journal of Economic Perspectives, American Economic Association, vol. 3(3), pages 23-36, Summer.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Anthony M. Kwasnica & Katerina Sherstyuk, 2013. "Multi-Unit Auctions," Working Papers 201301, University of Hawaii at Manoa, Department of Economics.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:bpj:bejtec:v:12:y:2012:i:1:n:2. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Peter Golla).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.