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Bidder Preferences among Auction Institutions

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  • Radosveta Ivanova-Stenzel
  • Timothy C. Salmon

Abstract

This study examines bidder preferences between alternative auction institutions. We seek to characterize experimentally the degree to which bidders prefer an ascending auction to a sealed bid auction. We find very strong ceteris paribus preferences for the ascending institution with bidders choosing it overwhelmingly often when entry prices for the two auctions are the same. When the entry prices of the two auctions differ, many subjects can be shown to be willing to pay more to enter the ascending auction than is explainable by their risk attitudes when accounting for their expectations about the risk preferences of their opponents. (JEL C91, D44) Copyright 2004, Oxford University Press.

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Bibliographic Info

Article provided by Western Economic Association International in its journal Economic Inquiry.

Volume (Year): 42 (2004)
Issue (Month): 2 (April)
Pages: 223-236

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Handle: RePEc:oup:ecinqu:v:42:y:2004:i:2:p:223-236

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  1. Bulow, Jeremy & Roberts, John, 1989. "The Simple Economics of Optimal Auctions," Journal of Political Economy, University of Chicago Press, vol. 97(5), pages 1060-90, October.
  2. McAfee, R. Preston & McMillan, John, 1987. "Auctions with entry," Economics Letters, Elsevier, vol. 23(4), pages 343-347.
  3. McAfee, R Preston, 1993. "Mechanism Design by Competing Sellers," Econometrica, Econometric Society, vol. 61(6), pages 1281-1312, November.
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  6. Selten, Reinhard, 1996. "Axiomatic Characterization of the Quadratic Scoring Rule," Discussion Paper Serie B 390, University of Bonn, Germany.
  7. Cox, James C & Smith, Vernon L & Walker, James M, 1988. " Theory and Individual Behavior of First-Price Auctions," Journal of Risk and Uncertainty, Springer, vol. 1(1), pages 61-99, March.
  8. repec:wop:humbsf:2001-69 is not listed on IDEAS
  9. Klemperer, Paul, 2000. "What Really Matters in Auction Design," CEPR Discussion Papers 2581, C.E.P.R. Discussion Papers.
  10. Ham, John C. & Kagel, John H. & Lehrer, Steven F., 2005. "Randomization, endogeneity and laboratory experiments: the role of cash balances in private value auctions," Journal of Econometrics, Elsevier, vol. 125(1-2), pages 175-205.
  11. Lucking-Reiley, David, 2000. "Auctions on the Internet: What's Being Auctioned, and How?," Journal of Industrial Economics, Wiley Blackwell, vol. 48(3), pages 227-52, September.
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  13. Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer, vol. 10(2), pages 171-178, June.
  14. Ivanova-Stenzel, Radosveta & Sonsino, Doron, 2001. "Comparative study of one-bid versus two-bid auctions," SFB 373 Discussion Papers 2001,69, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
  15. Levin, Dan & Smith, James L, 1994. "Equilibrium in Auctions with Entry," American Economic Review, American Economic Association, vol. 84(3), pages 585-99, June.
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  19. Patrick Bajari & Ali Hortacsu, 2000. "Winner's Curse, Reserve Prices and Endogenous Entry: Empirical Insights from eBay Auctions," Econometric Society World Congress 2000 Contributed Papers 1927, Econometric Society.
  20. Ivanova-Stenzel, Radosveta & Sonsino, Doron, 2004. "Comparative study of one-bid versus two-bid auctions," Journal of Economic Behavior & Organization, Elsevier, vol. 54(4), pages 561-583, August.
  21. Daniel Friedman, 1983. "Effective Scoring Rules for Probabilistic Forecasts," Management Science, INFORMS, vol. 29(4), pages 447-454, April.
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  25. repec:kap:expeco:v:1:y:1998:i:1:p:43-62 is not listed on IDEAS
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