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A laboratory study of Demand Reduction and Collusion in Uniform- and Discriminatory-Price Auctions

Author

Listed:
  • Alexander Elbittar

    (Centro de Investigacion y Docencia Economica (CIDE))

  • Andrei Gomberg

    (Centro de Investigacion Economica (CIE), Instituto Tecnologico Autonomo de Mexico (ITAM))

Abstract

We report results of an experimental study of multi-object uniform and discriminatory-price auctions in an environment of publicly known common values, concentrating on an environment where theory predicts sharply different results of the two auction formats. We find that the bidding behavior in the uniform case exhibits two clear regularities: agents consistently play weakly dominated strategies by overbidding on the first unit and have moderate difficulty coordinating on the high payoff (low auction revenue) equilibrium predicted by theory. However, subjects with experience in the same environment are better at reducing demand to achieve higher payoff. Bidders in discriminatory auctions, as predicted, tend to submit bids close to value for all units and are not generally successful in attempts at collusion.

Suggested Citation

  • Alexander Elbittar & Andrei Gomberg, 2008. "A laboratory study of Demand Reduction and Collusion in Uniform- and Discriminatory-Price Auctions," Working Papers 0801, Centro de Investigacion Economica, ITAM.
    • Handle: RePEc:cie:wpaper:0801
    as

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    References listed on IDEAS

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    Keywords

    Experimental economics; Second price auctions;

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