Demand Curve Shifts in Multi-Unit Auctions: Evidence from a Laboratory Experiment
AbstractBasic economic theory predicts that a consumer's willingness to pay for a good is affected by the presence of complements and substitutes. In an auction setting, this theory implies that the presence of complements would increase bid prices for a good, while the presence of substitutes would decrease bid prices for a good. However, several experimental auction studies have sold complementary or substitutable products without regard for the effects these actions could have on bidding behavior. Using data from an experimental auction specifically designed to test the effect of complements and substitutes on bids, we used both unconditional tests and conditional tests where we derived demand flexibilities to analyze whether selling complementary and substitutable products has an effect on bids. Our results show that the availability of complementary and substitutable products affects bids in the expected directions. This finding has important implications for researchers who design experimental auctions.
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Bibliographic InfoPaper provided by American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association) in its series 2005 Annual meeting, July 24-27, Providence, RI with number 19513.
Date of creation: 2005
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