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Creating competition out of thin air: An experimental study of right-to-choose auctions

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Author Info
Eliaz, Kfir
Offerman, Theo
Schotter, Andrew

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Abstract

This paper presents an experimental study of a mechanism that is commonly used to sell multiple heterogeneous goods. The novel feature of this procedure is that instead of selling each good in a separate auction, the seller executes a single auction in which buyers, who may be interested in completely different goods, compete for the right to choose a good. We provide experimental evidence that a Right-to-Choose (RTC) auction can generate more revenue than the theoretically optimal auction. Moreover, in contrast to the "optimal" auction, the RTC auction is approximately efficient in the sense that the surplus it generates is close to the maximal one. Furthermore, a seller who would like to retain some of his goods can generate more revenue with a restricted RTC auction in which not all rights-to-choose are sold, than with the theoretically optimal auction.

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File URL: http://www.sciencedirect.com/science/article/B6WFW-4P8SJB5-2/1/2ab15f3eae839212bf325e0492a4ee6d
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Publisher Info
Article provided by Elsevier in its journal Games and Economic Behavior.

Volume (Year): 62 (2008)
Issue (Month): 2 (March)
Pages: 383-416
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Handle: RePEc:eee:gamebe:v:62:y:2008:i:2:p:383-416

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Web page: http://www.elsevier.com/locate/inca/622836

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  1. Maarten C.W. Janssen & Vladimir A. Karamychev & Emiel Maasland, 2008. "Simultaneous Pooled Auctions with Multiple Bids and Preference Lists," Tinbergen Institute Discussion Papers 08-034/1, Tinbergen Institute. [Downloadable!]
  2. Young Han Lee & Ulrike Malmendier, 2007. "The Bidder's Curse," NBER Working Papers 13699, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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This page was last updated on 2009-12-3.

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