A laboratory study of Demand Reduction and Collusion in Uniform- and Discriminatory-Price Auctions
AbstractWe 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.
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Bibliographic InfoPaper provided by Centro de Investigacion Economica, ITAM in its series Working Papers with number 0801.
Length: 18 pages
Date of creation: Feb 2008
Date of revision:
Experimental economics; Second price auctions;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-05-17 (All new papers)
- NEP-COM-2008-05-17 (Industrial Competition)
- NEP-EXP-2008-05-17 (Experimental Economics)
- NEP-GTH-2008-05-17 (Game Theory)
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.:
- Lawrence M. Ausubel & Peter Cramton, 1995. "Demand Reduction and Inefficiency in Multi-Unit Auctions," Papers of Peter Cramton 98wpdr, University of Maryland, Department of Economics - Peter Cramton, revised 22 Jul 2002.
- Kagel, John H & Harstad, Ronald M & Levin, Dan, 1987. "Information Impact and Allocation Rules in Auctions with Affiliated Private Values: A Laboratory Study," Econometrica, Econometric Society, vol. 55(6), pages 1275-1304, November.
- Wilson, Robert, 1979. "Auctions of Shares," The Quarterly Journal of Economics, MIT Press, vol. 93(4), pages 675-89, November.
- Ronald Harstad, 2000. "Dominant Strategy Adoption and Bidders' Experience with Pricing Rules," Experimental Economics, Springer, vol. 3(3), pages 261-280, December.
- Orly Sade & Charles Schnitzlein & Jaime F. Zender, 2006. "Competition and Cooperation in Divisible Good Auctions: An Experimental Examination," Review of Financial Studies, Society for Financial Studies, vol. 19(1), pages 195-235.
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