Auctions with Resale When Private Values Are Uncertain: Theory and Empirical Evidence
AbstractAuction theory is one of the richest areas of research in economics over the past three decades. Yet whether and to what extent the introduction of secondary resale markets influences bidding behavior in sealed bid first-price auctions remains under researched. This study begins by developing theory to explore auctions with resale when private values are uncertain. We put our theory to the test by examining both field data and experimental data from the lab. Our field data are from a unique data set that includes nearly 3,000 auctions (over 10,000 individual bids) for cutting rights of standing timber in British Columbia from 1996-2000. In comparing bidding patterns across agents who are likely to have resale opportunities with those who likely do not, we find evidence that is consistent with our theoretical predictions. Critical evaluation of the reduced-form bidding model, however, reveals that sharp tests of the theoretical predictions are not possible because several other differences may exist across these bidder types. We therefore use a laboratory experiment to examine if the resale opportunity by itself can have the predicted effect. We find that while it does have the predicted effect, a theoretical model based on risk-averse bidders explains the overall data patterns more accurately than a model based on risk-neutral bidders. More generally, the paper highlights the inferential power of combining naturally occurring data with laboratory data.
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 National Bureau of Economic Research, Inc in its series NBER Working Papers with number 10639.
Date of creation: Jul 2004
Date of revision:
Note: IO PE EEE
Contact details of provider:
Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
Web page: http://www.nber.org
More information through EDIRC
Find related papers by JEL classification:
- L4 - Industrial Organization - - Antitrust Issues and Policies
- L7 - Industrial Organization - - Industry Studies: Primary Products and Construction
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-08-31 (All new papers)
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Saral, Krista Jabs, 2012.
"Speculation and demand reduction in English clock auctions with resale,"
Journal of Economic Behavior & Organization,
Elsevier, vol. 84(1), pages 416-431.
- Saral, Krista Jabs, 2010. "Speculation and Demand Reduction in English Clock Auctions with Resale," MPRA Paper 25139, University Library of Munich, Germany.
- Heinemann, Frank & Nagel, Rosemarie & Ockenfels, Peter, 2004.
"Measuring Strategic Uncertainty in Coordination Games,"
Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems
6, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
- Frank Heinemann & Rosemarie Nagel & Peter Ockenfels, 2009. "Measuring Strategic Uncertainty in Coordination Games," Review of Economic Studies, Oxford University Press, vol. 76(1), pages 181-221.
- Frank Heinemann & Rosemarie Nagel & Peter Ockenfels, 2004. "Measuring Strategic Uncertainty in Coordination Games," CESifo Working Paper Series 1364, CESifo Group Munich.
- Frank Heinemann & Rosemarie Nagel & Peter Ockenfels, 2004. "Measuring strategic uncertainty in coordination games," Economics Working Papers 804, Department of Economics and Business, Universitat Pompeu Fabra.
- David Bruner & Michael McKee & Rudy Santore, 2008.
"Hand in the Cookie Jar: An Experimental Investigation of Equity-based Compensation and Managerial Fraud,"
08-05, Department of Economics, Appalachian State University.
- David Bruner & Michael McKee & Rudy Santore, 2008. "Hand in the Cookie Jar: An Experimental Investigation of Equity-Based Compensation and Managerial Fraud," Southern Economic Journal, Southern Economic Association, vol. 75(1), pages 261-278, July.
- Saral, Krista Jabs, 2009. "An Analysis of Market-Based and Statutory Limited Liability in Second Price Auctions," MPRA Paper 25143, University Library of Munich, Germany.
- Georganas, Sotiris, 2011. "English auctions with resale: An experimental study," Games and Economic Behavior, Elsevier, vol. 73(1), pages 147-166, September.
- Marco Pagnozzi & Krista Jabs Saral, 2013.
"Multi-Object Auctions with Resale: An Experimental Analysis,"
CSEF Working Papers
328, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
- Pagnozzi, Marco & Saral, Krista Jabs, 2013. "Multi-Object Auctions with Resale: An Experimental Analysis," MPRA Paper 43665, University Library of Munich, Germany.
- Andreas Lange & John A. List & Michael K. Price, 2010.
"Auctions with Resale When Private Values Are Uncertain: Evidence from the Lab and Field,"
NBER Working Papers
16360, National Bureau of Economic Research, Inc.
- Lange, Andreas & List, John A. & Price, Michael K., 2011. "Auctions with resale when private values are uncertain: Evidence from the lab and field," International Journal of Industrial Organization, Elsevier, vol. 29(1), pages 54-64, January.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.