Multi-unit common value auctions: an experimental comparison between the static and the dynamic uniform auction
AbstractIt is still an open question whether the dynamic or the static format should be used in multi-unit settings, in a uniform price auction. The present study conducts an economic experiment in a common value environment, where it is found that it is more a question of whether the auctioneer wants to facilitate price discovery, and thereby lessen the otherwise pervasive overbidding, or if only the revenue is important. The experiment in the present paper provides evidence that the static format gives significantly greater revenue than the dynamic auction, in both small and large group sizes. But a higher revenue comes at a cost; half of the auctions in the static format yield negative profits to the bidders, the winner's curse is more severely widespread in the static auction, and only a minority of the bidders use the equilibrium bidding strategy.
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Bibliographic InfoPaper provided by CTS - Centre for Transport Studies Stockholm (KTH and VTI) in its series Working papers in Transport Economics with number 2012:24.
Length: 37 pages
Date of creation: 05 Nov 2012
Date of revision:
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Postal: Centrum för Transportstudier (CTS), Teknikringen 10, 100 44 Stockholm, Sweden
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Laboratory experiment; Multi-Unit auction; Common value auction;
Find related papers by JEL classification:
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
- D44 - Microeconomics - - Market Structure and Pricing - - - Auctions
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-11-17 (All new papers)
- NEP-EXP-2012-11-17 (Experimental Economics)
- NEP-HPE-2012-11-17 (History & Philosophy of Economics)
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