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Resolving Uncertainty about the Number of Bidders in Independent Private-Value Auctions: An Experimental Analysis

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  • Douglas Dyer
  • John H. Kagel
  • Dan Levin

Abstract

Results from first-price, sealed-bid auctions, in which there is uncertainty regarding the number of bidders, are reported. Consistent with recent theoretical findings, concealing information regarding the number of bidders raises more revenue for the seller than revealing information. Individual bids show that (1) narrowly interpreted, the Nash equilibrium bidding theory underlying these theoretical predictions is rejected, as less than 50% of all bids satisfy the strict inequality requirements of the theory, but (2) a majority of the deviations from these inequality requirements favor the revenue-raising predictions of the Nash model, and, in a large number of cases, involve marginal violations of the theory.

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Bibliographic Info

Article provided by The RAND Corporation in its journal RAND Journal of Economics.

Volume (Year): 20 (1989)
Issue (Month): 2 (Summer)
Pages: 268-279

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Handle: RePEc:rje:randje:v:20:y:1989:i:summer:p:268-279

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Cited by:
  1. Joy A. Buchanan & Steven Gjerstad & David Porter, 2012. "Information Effects in Multi-Unit Dutch Auctions," Working Papers 12-08, Chapman University, Economic Science Institute.
  2. Lansdowne, Z. F., 1996. "Extensions of bidding theory: Concealed bidding, optimal number of bidders, and follow-on contracts," Omega, Elsevier, vol. 24(1), pages 107-114, February.
  3. Daniel J. Henderson & John A. List & Daniel L. Millimet & Christopher F. Parmeter & Michael K. Price, 2011. "Empirical Implementation of Nonparametric First-Price Auction Models," NBER Working Papers 17095, National Bureau of Economic Research, Inc.
  4. Ferona, Angeliki & Tsionas, Efthymios G., 2012. "Measurement of excess bidding in auctions," Economics Letters, Elsevier, vol. 116(3), pages 377-380.
  5. Henderson, Daniel J. & List, John A. & Millimet, Daniel L. & Parmeter, Christopher F. & Price, Michael K., 2008. "Imposing Monotonicity Nonparametrically in First-Price Auctions," MPRA Paper 8769, University Library of Munich, Germany.
  6. Sascha Füllbrunn & Tibor Neugebauer, 2013. "Varying the number of bidders in the first-price sealed-bid auction: experimental evidence for the one-shot game," Theory and Decision, Springer, vol. 75(3), pages 421-447, September.
  7. Ertaç, Seda & Hortaçsu, Ali & Roberts, James W., 2011. "Entry into auctions: An experimental analysis," International Journal of Industrial Organization, Elsevier, vol. 29(2), pages 168-178, March.
  8. Neugebauer, Tibor & Selten, Reinhard, 2006. "Individual behavior of first-price auctions: The importance of information feedback in computerized experimental markets," Games and Economic Behavior, Elsevier, vol. 54(1), pages 183-204, January.
  9. Kumbhakar, Subal C. & Parmeter, Christopher F. & Tsionas, Efthymios G., 2012. "Bayesian estimation approaches to first-price auctions," Journal of Econometrics, Elsevier, vol. 168(1), pages 47-59.

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