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Sealed Bid Auctions vs. Ascending Bid Auctions: An Experimental Study

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Author Info

  • Andersson, Tommy

    ()
    (Department of Economics, Lund University)

  • Andersson, Christer

    (Department of Economics, Lund University)

  • Andersson, Ola

    ()
    (Department of Economics, Stockholm School of Economics)

Abstract

This paper considers the sealed bid and ascending auction, which both identifies the minimum Walrasian equilibrium prices and where truthful preference revelation constitutes an equilibrium. Even though these auction formats share many theoretical properties, there are behavioral aspects that are not easily captured. To explore this issue in more detail, this paper experimentally investigates what role the design of the auction format has for its outcome. The results suggest that the sealed bid mechanism performs weakly better in all of investigated measures (consistent reporting, efficiency etc.). In addition, we find that the performance of the ascending auction is increasing over time, whereas the sealed bid auction shows no such tendency.

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Bibliographic Info

Paper provided by Lund University, Department of Economics in its series Working Papers with number 2010:17.

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Length: 10 pages
Date of creation: 17 Dec 2010
Date of revision:
Publication status: Published as Andersson, Tommy, Christer Andersson and Ola Andersson, 'Sealed Bid Auctions vs. Ascending Bid Auctions: An Experimental Study' in Review of Economic Design, 2013, pages 1-16.
Handle: RePEc:hhs:lunewp:2010_017

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Postal: Department of Economics, School of Economics and Management, Lund University, Box 7082, S-220 07 Lund,Sweden
Phone: +46 +46 222 0000
Fax: +46 +46 2224613
Web page: http://www.nek.lu.se/en
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Related research

Keywords: Auctions; Non-manipulability; Efficiency; Experiments;

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References

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  1. Demange, Gabrielle & Gale, David & Sotomayor, Marilda, 1986. "Multi-Item Auctions," Journal of Political Economy, University of Chicago Press, vol. 94(4), pages 863-72, August.
  2. Mishra, Debasis & Parkes, David C., 2007. "Ascending price Vickrey auctions for general valuations," Journal of Economic Theory, Elsevier, vol. 132(1), pages 335-366, January.
  3. de Vries, Sven & Schummer, James & Vohra, Rakesh V., 2007. "On ascending Vickrey auctions for heterogeneous objects," Journal of Economic Theory, Elsevier, vol. 132(1), pages 95-118, January.
  4. Demange, Gabrielle & Gale, David, 1985. "The Strategy Structure of Two-sided Matching Markets," Econometrica, Econometric Society, vol. 53(4), pages 873-88, July.
  5. Tommy Andersson & Christer Andersson, 2012. "Properties of the DGS-Auction Algorithm," Computational Economics, Society for Computational Economics, vol. 39(2), pages 113-133, February.
  6. Olson, Mark & Porter, David, 1994. "An Experimental Examination into the Design of Decentralized Methods to Solve the Assignment Problem with and without Money," Economic Theory, Springer, vol. 4(1), pages 11-40, January.
  7. Attiyeh, Greg & Franciosi, Robert & Isaac, R Mark, 2000. " Experiments with the Pivot Process for Providing Public Goods," Public Choice, Springer, vol. 102(1-2), pages 95-114, January.
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Cited by:
  1. Steven Tucker & Charles Noussair & Anthony M. Kwasnica & Katerina Sherstyuk, 2013. "Multiunit Auctions," Journal of Economic Surveys, Wiley Blackwell, vol. 27(3), pages 461-490, 07.

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