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Bidder Preferences Among Auction Institutions

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Author Info

  • Radosveta Ivanova-Stenzel

    (Humboldt University of Berlin)

  • Timothy C. Salmon

    (Florida State University)

Abstract

This study examines bidder preferences between alternative auction institutions. We seek to experimentally characterize the degree to which bidders prefer an ascending auction to a sealed bid auction. We find very strong ceteris paribus preferences for the ascending institution with bidders choosing it overwhelmingly often when entry prices for the two auctions are the same. When the entry prices of the two auctions differ, many subjects can be shown to be willing to pay more to enter the ascending auction than is explainable by their risk attitudes when accounting for their expectations about the risk preferences of their opponents.

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File URL: http://128.118.178.162/eps/exp/papers/0404/0404005.pdf
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Bibliographic Info

Paper provided by EconWPA in its series Experimental with number 0404005.

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Length: 18 pages
Date of creation: 22 Apr 2004
Date of revision:
Handle: RePEc:wpa:wuwpex:0404005

Note: Type of Document - pdf; pages: 18
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Web page: http://128.118.178.162

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Keywords: auctions; mechanism design; electronic markets;

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References

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  1. Paul Klemperer, 2002. "What Really Matters in Auction Design," Journal of Economic Perspectives, American Economic Association, vol. 16(1), pages 169-189, Winter.
  2. Milgrom, Paul R & Weber, Robert J, 1982. "A Theory of Auctions and Competitive Bidding," Econometrica, Econometric Society, vol. 50(5), pages 1089-1122, September.
  3. John G. Riley & William Samuelson, 1979. "Optimal Auctions," UCLA Economics Working Papers 152, UCLA Department of Economics.
  4. Harstad, Ronald M, 1990. "Alternative Common-Value Auction Procedures: Revenue Comparisons with Free Entry," Journal of Political Economy, University of Chicago Press, vol. 98(2), pages 421-29, April.
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  8. Daniel Friedman, 1983. "Effective Scoring Rules for Probabilistic Forecasts," Management Science, INFORMS, vol. 29(4), pages 447-454, April.
  9. Matthews, Steven, 1987. "Comparing Auctions for Risk Averse Buyers: A Buyer's Point of View," Econometrica, Econometric Society, vol. 55(3), pages 633-46, May.
  10. Patrick Bajari & Ali Hortacsu, 2000. "Winner's Curse, Reserve Prices and Endogenous Entry: Empirical Insights from eBay Auctions," Econometric Society World Congress 2000 Contributed Papers 1927, Econometric Society.
  11. Ivanova-Stenzel, Radosveta & Sonsino, Doron, 2001. "Comparative study of one-bid versus two-bid auctions," SFB 373 Discussion Papers 2001,69, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
  12. Selten, Reinhard, 1996. "Axiomatic Characterization of the Quadratic Scoring Rule," Discussion Paper Serie B 390, University of Bonn, Germany.
  13. McAfee, R Preston, 1993. "Mechanism Design by Competing Sellers," Econometrica, Econometric Society, vol. 61(6), pages 1281-1312, November.
  14. Engelbrecht-Wiggans Richard, 1993. "Optimal Auctions Revisited," Games and Economic Behavior, Elsevier, vol. 5(2), pages 227-239, April.
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  17. Levin, Dan & Smith, James L, 1994. "Equilibrium in Auctions with Entry," American Economic Review, American Economic Association, vol. 84(3), pages 585-99, June.
  18. repec:kap:expeco:v:1:y:1998:i:1:p:43-62 is not listed on IDEAS
  19. Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer, vol. 10(2), pages 171-178, June.
  20. Isaac, R Mark & James, Duncan, 2000. " Just Who Are You Calling Risk Averse?," Journal of Risk and Uncertainty, Springer, vol. 20(2), pages 177-87, March.
  21. Lucking-Reiley, David, 2000. "Auctions on the Internet: What's Being Auctioned, and How?," Journal of Industrial Economics, Wiley Blackwell, vol. 48(3), pages 227-52, September.
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  23. Ivanova-Stenzel, Radosveta & Sonsino, Doron, 2004. "Comparative study of one-bid versus two-bid auctions," Journal of Economic Behavior & Organization, Elsevier, vol. 54(4), pages 561-583, August.
  24. repec:wop:humbsf:2001-69 is not listed on IDEAS
  25. Ham, John C. & Kagel, John H. & Lehrer, Steven F., 2005. "Randomization, endogeneity and laboratory experiments: the role of cash balances in private value auctions," Journal of Econometrics, Elsevier, vol. 125(1-2), pages 175-205.
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