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Bidding behavior in the bisection auction – an experimental investigation

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  • Grigorieva, Elena
  • Strobel, Martin

    (METEOR)

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    Abstract

    We present a laboratory experiment in which we investigate bidding behavior with independent private values in the recently proposed bisection auction, and compare it with two classical auction formats - the Vickrey auction and the English auction. We test whether subjects behave strategically equivalent, following the dominant truth-telling strategy, as predicted by theory. Furthermore, we provide some insights concerning the learning process, the efficiency of allocation, and the revenue to the auctioneer. Data show that the bisection auction performs better than the Vickrey auction and only in some terms worse than the English auction.

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    Bibliographic Info

    Paper provided by Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR) in its series Research Memorandum with number 026.

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    Date of creation: 2006
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    Handle: RePEc:unm:umamet:2006026

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    Web page: http://www.maastrichtuniversity.nl/
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    Keywords: Economics ;

    References

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    1. Rothkopf, Michael H & Teisberg, Thomas J & Kahn, Edward P, 1990. "Why Are Vickrey Auctions Rare?," Journal of Political Economy, University of Chicago Press, vol. 98(1), pages 94-109, February.
    2. Grigorieva,Elena & Herings,P. Jean-Jacques & Müller,Rudolf & Vermeulen,Dries, 2002. "The private value single item bisection auction," Research Memorandum 051, Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR).
    3. Green, Jerry & Laffont, Jean-Jacques, 1977. "Characterization of Satisfactory Mechanisms for the Revelation of Preferences for Public Goods," Econometrica, Econometric Society, vol. 45(2), pages 427-38, March.
    4. Ronald Harstad, 2000. "Dominant Strategy Adoption and Bidders' Experience with Pricing Rules," Experimental Economics, Springer, vol. 3(3), pages 261-280, December.
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