Buy or wait, that is the option : the buyer's option in sequential laboratory auctions
AbstractThis paper reports the results from an experiment on two-unit sequential auctions with and without a buyer’s option (which gives the winner of the first auction the right to buy the second unit at the winning price). The demand for the two items is either decreasing, flat, or increasing. The 4 main auction institutions (first-price, Dutch, second-price, English) are studied. We find that observed bidding behavior is close to Nash equilibrium bidding in the auctions for the second unit, but there are substantial deviations in the auctions for the first unit. Despite these deviations, the buyer’s option is correctly used in most cases. The revenue-ranking of the 4 auction institutions is the same as in single-unit experiments. Finally, successive prices are declining when the buyer’s option is available. The last 2 results are used to compare real-life auctions and to discuss the findings in related field-data studies.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Laboratoire d'Economie Appliquee, INRA in its series Research Unit Working Papers with number 0410.
Length: 34 pages
Date of creation: Oct 2004
Date of revision:
Contact details of provider:
Postal: INRA-LEA, 48, Boulevard Jourdan, 75014 Paris, France
Phone: 331 43136364
Fax: 331 43136362
Web page: http://www.inra.fr/Internet/Departements/ESR/UR/lea/index.html
experimental economics; sequential auctions; buyer's option;
Other versions of this item:
- Philippe Février & Laurent Linnemer & Michael Visser, 2007. "Buy or wait, that is the option: the buyer's option in sequential laboratory auctions," RAND Journal of Economics, RAND Corporation, vol. 38(1), pages 98-118, 03.
- Philippe Fevrier & Laurent Linnemer & Michael Visser, 2001. "Buy or Wait, That is the Option. The Buyer’s Option in Sequential Laboratory Auctions," Working Papers 2001-30, Centre de Recherche en Economie et Statistique.
- 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:
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Anthony M. Kwasnica & Katerina Sherstyuk, 2013.
201301, University of Hawaii at Manoa, Department of Economics.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Madeleine Roux) The email address of this maintainer does not seem to be valid anymore. Please ask Madeleine Roux to update the entry or send us the correct address.
If references are entirely missing, you can add them using this form.