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Experimental Evidence on the Multibidding Mechanism

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  • David Pérez-Castrillo
  • Róbert F. Veszteg

Abstract

Prez-Castrillo and Wettstein (2002) and Veszteg (2004) propose the use of a multibidding mechanism for situations where agents have to choose a common project. Examples are decisions involving public goods (or public "bads"). We report experimental results to test the practical tractability and effectiveness of the multibidding mechanisms in environments where agents hold private information concerning their valuation of the projects. The mechanism performed quite well in the laboratory: it provided the ex post efficient outcome in roughly three quarters of the cases across the treatments; moreover, the largest part of the subject pool formed their bids according to the theoretical bidding behavior.

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Bibliographic Info

Paper provided by Barcelona Graduate School of Economics in its series Working Papers with number 155.

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Date of creation: Jan 2005
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Handle: RePEc:bge:wpaper:155

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Keywords: Experiments; mechanisms; uncertainty;

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References

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  1. d'ASPREMONT, Claude & GERARD-VARET, Louis-André, . "Incentives and incomplete information," CORE Discussion Papers RP -354, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  2. Binmore,K. & McCarthy,J. & Ponti,G. & ..., 1999. "A backward induction experiment," Working papers 34, Wisconsin Madison - Social Systems.
  3. William T. Harbaugh & Kate Krause & Lise Vesterlund, 1999. "Risk attitudes of children and adults: choices over small and large probability gains and losses," University of Oregon Economics Department Working Papers 1999-2, University of Oregon Economics Department.
  4. Josef Falkinger, 2000. "A Simple Mechanism for the Efficient Provision of Public Goods: Experimental Evidence," American Economic Review, American Economic Association, vol. 90(1), pages 247-264, March.
  5. Róbert Veszteg, 2010. "Multibidding game under uncertainty," Review of Economic Design, Springer, vol. 14(3), pages 311-329, September.
  6. Smith, Vernon L, 1979. " An Experimental Comparison of Three Public Good Decision Mechanisms," Scandinavian Journal of Economics, Wiley Blackwell, vol. 81(2), pages 198-215.
  7. Smith, Vernon L, 1980. "Experiments with a Decentralized Mechanism for Public Good Decisions," American Economic Review, American Economic Association, vol. 70(4), pages 584-99, September.
  8. Pavlo Blavatsky, 2003. "Note on "Small Feedback-based Decisions and Their Limited Correspondence to Description-based Decisions"," CERGE-EI Working Papers wp218, The Center for Economic Research and Graduate Education - Economic Institute, Prague.
  9. David P�rez-Castrillo & David Wettstein, 2002. "Choosing Wisely: A Multibidding Approach," American Economic Review, American Economic Association, vol. 92(5), pages 1577-1587, December.
  10. Coppinger, Vicki M & Smith, Vernon L & Titus, Jon A, 1980. "Incentives and Behavior in English, Dutch and Sealed-Bid Auctions," Economic Inquiry, Western Economic Association International, vol. 18(1), pages 1-22, January.
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Cited by:
  1. Perez-Castrillo, David & Veszteg, Robert F., 2007. "Choosing a common project: Experimental evidence on the multibidding mechanism," Journal of Economic Behavior & Organization, Elsevier, vol. 63(3), pages 394-411, July.
  2. David Pérez-Castrillo & Nicolas Quérou, 2010. "Smooth multibidding mechanisms," UFAE and IAE Working Papers 849.10, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
  3. Róbert F. Veszteg, 2004. "Multibidding Game under Uncertainty," Faculty Working Papers 14/04, School of Economics and Business Administration, University of Navarra.

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