Bidders' Choice Auctions: Raising Revenues Through the Right to Choose
AbstractSales of multiple real-estate properties are often conducted via a sequence of ascending auctions, giving the winner at each stage the right to choose one of the available lots. We show that when bidders are risk averse, such "bidders' choice" auctions raise more revenues than standard simultaneous or sequential ascending auctions. We also report the results of laboratory experiments to investigate the effectiveness of bidders' choice auctions vis-a-vis the simultaneous ascending auction. The revenue-superiority of the bidders' choice auction is corroborated by the experimental data. Finally, we compare observed bidding behavior in the experiments with theoretically predicted bids to estimate a common risk aversion parameter from the data. (JEL: D44, C72) Copyright (c) 2004 The European Economic Association.
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Bibliographic InfoArticle provided by MIT Press in its journal Journal of the European Economic Association.
Volume (Year): 2 (2004)
Issue (Month): 2-3 (04/05)
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Other versions of this item:
- Goeree, Jacob & Plott, Charles & Wooders, John, 2003. "Bidders' choice auctions: Raising revenues through the right to choose," Working Papers 1181, California Institute of Technology, Division of the Humanities and Social Sciences.
- D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
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