Measuring the impact of information aggregation mechanisms: An experimental investigation
AbstractAbstract 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 InfoArticle provided by Elsevier in its journal Journal of Economic Behavior & Organization.
Volume (Year): 78 (2011)
Issue (Month): 3 (May)
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Web page: http://www.elsevier.com/locate/jebo
Market design Information aggregation Cheap-talk Auction Initial public offering;
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