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An experimental examination of demand reduction in multi-unit versions of the Uniform-price, Vickrey, and English auctions

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Author Info
David Porter (Interdisciplinary Center for Economic Science, George Mason University, USA)
Roumen Vragov (Baruch College City, University of New York, USA)

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Abstract

Demand reduction in Uniform-price and English auctions are strategic reactions by participants to reduce price and thus increase potential profits. Laboratory experiments similar to the field experiments performed by List and Reiley (Am. Econ. Rev. 2000; 9(4): 961-972) in which two individuals with demands for two units vie for two units through a Uniform-price, English or Vickrey auction are conducted. We find strong support for demand reduction in both the English and Uniform-price auctions, with significantly more dramatic reductions in the English auction. However, there is significant overbidding in both the Vickrey and Uniform-price auction. This overbidding solves a puzzle found by List and Reiley in their field experiment data. Copyright © 2006 John Wiley & Sons, Ltd.

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File URL: http://hdl.handle.net/10.1002/mde.1281
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Publisher Info
Article provided by John Wiley & Sons, Ltd. in its journal Managerial and Decision Economics.

Volume (Year): 27 (2006)
Issue (Month): 6 ()
Pages: 445-458
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Handle: RePEc:wly:mgtdec:v:27:y:2006:i:6:p:445-458

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Web page: http://www3.interscience.wiley.com/cgi-bin/jhome/7976

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Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. John A. List & David Lucking-Reiley, 2000. "Bidding Behavior and Decision Costs in Field Experiments," Working Papers 0006, Department of Economics, Vanderbilt University. [Downloadable!]
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  2. Rothkopf, Michael H & Teisberg, Thomas J & Kahn, Edward P, 1990. "Why Are Vickrey Auctions Rare?," Journal of Political Economy, University of Chicago Press, vol. 98(1), pages 94-109, February. [Downloadable!] (restricted)
  3. Kagel, John H & Levin, Dan, 2001. "Behavior in Multi-unit Demand Auctions: Experiments with Uniform Price and Dynamic Vickrey Auctions," Econometrica, Econometric Society, vol. 69(2), pages 413-54, March.
  4. Lawrence M. Ausubel & Peter Cramton, 1995. "Demand Reduction and Inefficiency in Multi-Unit Auctions," Papers of Peter Cramton 98wpdr, University of Maryland, Department of Economics - Peter Cramton, revised 22 Jul 2002. [Downloadable!]
  5. Robert Forsythe & R. Mark Isaac & Thomas R. Palfrey, 1989. "Theories and Tests of "Blind Bidding" in Sealed-Bid Auctions," RAND Journal of Economics, The RAND Corporation, vol. 20(2), pages 214-238, Summer. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Burtraw, Dallas & Goeree, Jacob & Holt, Charles A. & Myers, Erica & Palmer, Karen & Shobe, William, 2008. "Collusion in Auctions for Emission Permits: An Experimental Analysis," Discussion Papers dp-08-36, Resources For the Future. [Downloadable!]
  2. Ping Zhang, 2009. "Characterization of Pure Strategy Equilibria in Uniform Price IPO Auctions," Discussion Papers 2009-05, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham. [Downloadable!]
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