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Bidding Behavior in Multi-Unit Auctions - An Experimental Investigation and some Theoretical Insights

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Author Info
Dirk Engelmann
Veronika Grimm

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Abstract

We present laboratory experiments of five different multi-unit auction mechanisms. Two units of a homogeneous object were auctioned off among two bidders with at demand for two units. We test whether expected demand reduction occurs in open and sealed-bid uniform-price auctions. Revenue equivalence is tested for these auctions as well as for the Ausubel, the Vickrey and the discriminatory sealed-bid auction. Furthermore, we compare the five mechanisms with respect to the efficient allocation of the units. We also provide some theoretical insights concerning the equilibria of uniform-price auctions with incomplete information.

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Publisher Info
Paper provided by The Center for Economic Research and Graduate Education - Economic Institute, Prague in its series CERGE-EI Working Papers with number wp210.

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Date of creation: Jun 2003
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Handle: RePEc:cer:papers:wp210

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Related research
Keywords: Multi-Unit Auctions; Demand Reduction; Experimental Economics;

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Find related papers by JEL classification:
D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior

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References listed on IDEAS
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. Glenn W. Harrison & John A. List, 2004. "Field Experiments," Journal of Economic Literature, American Economic Association, vol. 42(4), pages 1009-1055, December. [Downloadable!] (restricted)
  2. David M Kreps & Robert Wilson, 2003. "Sequential Equilibrium," Levine's Working Paper Archive 618897000000000813, David K. Levine. [Downloadable!]
    Other versions:
  3. Matthew Rabin., 2000. "Risk Aversion and Expected-Utility Theory: A Calibration Theorem," Economics Working Papers E00-279, University of California at Berkeley. [Downloadable!]
  4. Grimm, Veronika & Riedel, Frank & Wolfstetter, Elmar, 2003. "Low price equilibrium in multi-unit auctions: the GSM spectrum auction in Germany," International Journal of Industrial Organization, Elsevier, vol. 21(10), pages 1557-1569, December. [Downloadable!] (restricted)
    Other versions:
  5. Matthew Rabin & Richard H. Thaler, 2001. "Anomalies: Risk Aversion," Journal of Economic Perspectives, American Economic Association, vol. 15(1), pages 219-232, Winter. [Downloadable!] (restricted)
  6. Gary Charness & Matthew Rabin, 2002. "Understanding Social Preferences with Simple Tests," Department of Economics, Working Paper Series 1042, Department of Economics, Institute for Business and Economic Research, UC Berkeley. [Downloadable!]
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  7. 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.
  8. Groves, Theodore, 1973. "Incentives in Teams," Econometrica, Econometric Society, vol. 41(4), pages 617-31, July. [Downloadable!] (restricted)
  9. John A. List & David Lucking-Reiley, 2000. "Demand Reduction in Multiunit Auctions: Evidence from a Sportscard Field Experiment," American Economic Review, American Economic Association, vol. 90(4), pages 961-972, September. [Downloadable!] (restricted)
  10. Noussair, Charles, 1995. "Equilibria in a Multi-object Uniform Price Sealed Bid Auction with Multi-unit Demands," Economic Theory, Springer, vol. 5(2), pages 337-51, March.
  11. Goswami, Gautam & Noe, Thomas H & Rebello, Michael J, 1996. "Collusion in Uniform-Price Auctions: Experimental Evidence and Implications for Treasury Auctions," Review of Financial Studies, Oxford University Press for Society for Financial Studies, vol. 9(3), pages 757-85. [Downloadable!] (restricted)
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  12. Madrigal, Vicente & Tan, Tommy C. C. & Werlang, Sergio Ribeiro da Costa, 1987. "Support restrictions and sequential equilibria," Journal of Economic Theory, Elsevier, vol. 43(2), pages 329-334, December. [Downloadable!] (restricted)
  13. Engelmann,Dirk & Strobel,Martin, 2002. "Inequality Aversion, Efficiency, and Maximin Preferences in Simple Distribution Experiments," Research Memoranda 015, Maastricht : MERIT, Maastricht Economic Research Institute on Innovation and Technology. [Downloadable!]
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  14. Georg Nöldeke & Eric van Damme, 1990. "Switching Away From Probability One Beliefs," Discussion Paper Serie A 304, University of Bonn, Germany.
  15. Matthew Rabin, 2000. "Risk Aversion and Expected-Utility Theory: A Calibration Theorem," Econometrica, Econometric Society, vol. 68(5), pages 1281-1292, September.
  16. Matthew Rabin, 2000. "Risk Aversion and Expected-Utility Theory: A Calibration Theorem," Department of Economics, Working Paper Series 1034, Department of Economics, Institute for Business and Economic Research, UC Berkeley. [Downloadable!]
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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. Jacob Goeree & Theo Offerman & Randolph Sloof, 2004. "Demand Reduction and Preemptive Bidding in Multi-Unit License Auctions," Tinbergen Institute Discussion Papers 04-122/1, Tinbergen Institute. [Downloadable!]
    Other versions:
  2. John List, 2007. "Field Experiments: A Bridge between Lab and Naturally Occurring Data," Advances in Economic Analysis & Policy, Berkeley Electronic Press, vol. 6(2), pages 1747-1747. [Downloadable!] (restricted)
    Other versions:
  3. Ping Zhang, 2008. "Uniform Price Auctions and Fixed Price Offerings in IPOs: An Experimental Comparison," Discussion Papers 2008-05, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham. [Downloadable!]
  4. Atakelty Hailu & Sophie Thoyer, 2006. "Multi-unit auction format design," Journal of Economic Interaction and Coordination, Springer, vol. 1(2), pages 129-146, November. [Downloadable!] (restricted)
  5. Ping Zhang, 2005. "Uniform Price Auction and Fixed Price Offerings in IPO: An Experimental Comparison," Discussion Papers 2005-20, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham. [Downloadable!]
  6. Ping Zhang, 2006. "Uniform price auctions and fixed price offerings in IPOs: an experimental comparison," Discussion Papers 2006-05, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham. [Downloadable!]
  7. Cason, Timothy N. & Noussair, Charles, 2005. "A Market with Frictions in the Matching Process: An Experimental Study," Purdue University Economics Working Papers 1194, Purdue University, Department of Economics. [Downloadable!]
    Other versions:
  8. List, John A. & Reiley, David, 2008. "Field Experiments in Economics: Palgrave Entry," IZA Discussion Papers 3273, Institute for the Study of Labor (IZA). [Downloadable!]
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