Auctions with Endogenous Price Ceiling:Theoretical and Experimental Results
AbstractThis paper analyzes an auction mechanism that excludes overoptimistic bidders inspired by the rules of the procurement auctions adopted by several Japanese local governments. Our theoretical and experimental results suggest that the endogenous exclusion rule reduces the probability of suffering a monetary loss induced by winning the auction, and also mitigates the problem of the winnerfs curse in the laboratory. However, this protection comes at the price of a lower revenue for the seller.
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Bibliographic InfoPaper provided by Institute of Social and Economic Research, Osaka University in its series ISER Discussion Paper with number 0747.
Date of creation: Jun 2009
Date of revision:
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-07-28 (All new papers)
- NEP-EXP-2009-07-28 (Experimental Economics)
- NEP-IND-2009-07-28 (Industrial Organization)
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