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Uniform vs. Discriminatory Auctions with Variable Supply - Experimental Evidence

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Author Info
Damian S. Damianov () (University of Texas-Pan American)
Jörg Oechssler () (University of Heidelberg, Department of Economics)
Johannes Gerd Becker () (ETH Zürich, Department of Economics)

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Abstract

In the variable supply auction considered here, the seller decides how many costumers with unit demand to serve after observing their bids. Bidders are uncertain about the seller's cost. We experimentally investigate whether a uniform or a discriminatory price auction is better for the seller in this setting. Exactly as predicted by theory, it turns out that the uniform price auction produces substantially higher bids, and consequently yields higher revenues and profits for the seller. Somewhat surprisingly but again predicted by theory, it also yields a higher number of transactions, which makes it the more efficient auction format.

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Publisher Info
Paper provided by University of Heidelberg, Department of Economics in its series Working Papers with number 0460.

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Length: 31 pages
Date of creation: Nov 2007
Date of revision: Nov 2007
Handle: RePEc:awi:wpaper:0460

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Related research
Keywords: auctions; experiment; discriminatory; uniform;

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Find related papers by JEL classification:
D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior

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