Bidding at Sequential First-Price Auctions with(out) Supply Uncertainty: a Laboratory Analysis
AbstractWe report on a series of experiments that test the effects of an uncertain supply on the formation of bids and prices in sequential first-price auctions with private-independent values and unit-demands. Supply is assumed uncertain when buyers do not know the exact number of units to be sold (i.e., the length of the sequence). Although we observe an important overbidding and a behavior that is nonmonotone in values when supply is certain, the data qualitatively support our price trend predictions and the risk neutral Nash equilibrium model of bidding for the last stage of a sequence, whether supply is certain or not. Our study shows that behavior in these markets changes significantly with the presence of an uncertain supply, and that it can be explained by assuming bidders formulate pessimistic beliefs about the occurrence of another stage.
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Bibliographic InfoPaper provided by Barcelona Graduate School of Economics in its series Working Papers with number 24.
Date of creation: Oct 2003
Date of revision:
sequential first-price auctions; independent private values; unit-demand; supply uncertainty; bidding behavior; price trends; experimental economics;
Other versions of this item:
- Tibor Neugebauer & Paul Pezanis-Christou, 2003. "Bidding at Sequential First-Price Auctions with(out) Supply Uncertainty: A Laboratory Analysis," UFAE and IAE Working Papers 558.03, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
- D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
- C9 - Mathematical and Quantitative Methods - - Design of Experiments
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