Keeping out Trojan Horses: Auctions and Bankruptcy in the Laboratory
AbstractIf a government auctions the right to market a good, continuity is likely to be of significant importance. In a laboratory experiment, we compare the effects of bidders' limited liability in the first-price sealed-bid auction and the English auction in a common value setting. Our data strongly reject our theoretical prediction that the English auction leads to less aggressive bids and fewer bankruptcies than the first-price sealed-bid auction. X -cursedness gives a robust explanation of our experimental observations, in contrast to risk aversion and asymmetric equilibria.
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Bibliographic InfoPaper provided by Tinbergen Institute in its series Tinbergen Institute Discussion Papers with number 11-024/1.
Date of creation: 11 Feb 2011
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Web page: http://www.tinbergen.nl
Auctions; Bankruptcy; Laboratory Experiment;
Find related papers by JEL classification:
- C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
- D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
- L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
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- Matthew Roelofs, 2002. "Common Value Auctions with Default: An Experimental Approach," Experimental Economics, Springer, vol. 5(3), pages 233-252, December.
- Matthew Rhodes-Kropf & S. Viswanathan, 2000. "Corporate Reorganizations and Non-Cash Auctions," Journal of Finance, American Finance Association, vol. 55(4), pages 1807-1854, 08.
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