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Measuring the impact of information aggregation mechanisms: An experimental investigation

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  • Bennouri, Moez
  • Gimpel, Henner
  • Robert, Jacques

Abstract

Abstract This paper measures the effectiveness of market-based and cheap-talk information aggregation. Both information aggregation mechanisms (IAMs) are frequently used prior to IPOs and sales of Treasury bonds - it is largely acknowledged that they provide agents with useful information for subsequent bidding. In a laboratory experiment, we study how information provided by IAMs interacts with private and public information and how agents integrate it in their strategic behavior in a multi-unit common-value uniform-price auction. In market-based IAMs, information gathering prevails and subsequent bidding shows that subjects acknowledge the precision of information. However, in cheap-talk IAMs, there is almost no transmitted information.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Economic Behavior & Organization.

Volume (Year): 78 (2011)
Issue (Month): 3 (May)
Pages: 302-318

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Handle: RePEc:eee:jeborg:v:78:y:2011:i:3:p:302-318

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Web page: http://www.elsevier.com/locate/jebo

Related research

Keywords: Market design Information aggregation Cheap-talk Auction Initial public offering;

References

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