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Bidding in common value fair division games

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  • Brünner, Tobias
  • Becker, Alice

Abstract

In a fair division game an indivisible object with an unknown common value is owned by a group of individuals and should be allocated to one of them while the others are compensated monetarily. Implementing fair division games in the lab, we fi nd many occurrences of the winner's curse under the first-price rule but only few occurrences under the second-price rule. Moreover, bidding behavior is very heterogeneous across subjects. A considerable share of our subjects anticipates that other bidders overbid and respond by bidding lower than in equilibrium. We fi nd that the level-k model performs well in explaining our results.

Suggested Citation

  • Brünner, Tobias & Becker, Alice, 2013. "Bidding in common value fair division games," VfS Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79810, Verein für Socialpolitik / German Economic Association.
    • Handle: RePEc:zbw:vfsc13:79810
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    References listed on IDEAS

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    Cited by:

    1. Werner Güth, 2011. "Rules (of Bidding) to Generate Equal Stated Profits: An Axiomatic Approach," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 167(4), pages 608-612, December.

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    More about this item

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles

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