Impact of valuation ranking information on bidding in first-price auctions: A laboratory study
Landsberger et al. [Landsberger, M., Rubinstein, J., Wolfstetter, E., Zamir, S., 2001. First-price auctions when the ranking of valuations is common knowledge. Review of Economic Design 6, 461-480] identified optimal bidder behavior in first-price private-value auctions when the ranking of valuations is common knowledge, and they derived comparative-statics predictions regarding the auctioneer's expected revenue and the efficiency of the allocation. The experiment reported here tests the behavioral components of these comparative-statics predictions. The results support the prediction that buyers are inclined to bid more aggressively when they learn they have the low value. Contrary to the theory, buyers are inclined to bid less when they learn they have the high value. Consistent with theory, the overall proportion of efficient allocations is lower than in the first-price auction before information is revealed. But as a result of high-value bidders decreasing their bids, the expected revenue does not increase on a regular basis, contrary to the theory's predictions.
If 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.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Kagel, John H & Levin, Dan, 1991.
"The Winner's Curse and Public Information in Common Value Auctions: Reply,"
American Economic Review,
American Economic Association, vol. 81(1), pages 362-69, March.
- John H. Kagel & Colin M. Campbell & Dan Levin, 1999. "The Winner's Curse and Public Information in Common Value Auctions: Reply," American Economic Review, American Economic Association, vol. 89(1), pages 325-334, March.
- Paul Klemperer, 2004.
"Auctions: Theory and Practice,"
Online economics textbooks,
SUNY-Oswego, Department of Economics, number auction1.
- J. Riley & E. Maskin, 1981.
"Optimal Auctions with Risk Averse Buyers,"
311, Massachusetts Institute of Technology (MIT), Department of Economics.
- Paul Klemperer, 1999.
"Auction Theory: A Guide to the Literature,"
Economics Series Working Papers
1999-W12, University of Oxford, Department of Economics.
- Paul Klemperer, 1999. "Auction Theory: A Guide to the Literature," Microeconomics 9903002, EconWPA.
- Klemperer, Paul, 1999. "Auction Theory: a Guide to the Literature," CEPR Discussion Papers 2163, C.E.P.R. Discussion Papers.
- Klemperer, P., 1999. "Auction Theory: a Guide to the Literature," Economics Papers 1999-w12, Economics Group, Nuffield College, University of Oxford.
- Athey, S., 1997.
"Sigle Crossing Properties and the Existence of Pure Strategy Equilibria in Games of Incomplete Information,"
97-11, Massachusetts Institute of Technology (MIT), Department of Economics.
- Athey, Susan, 2001. "Single Crossing Properties and the Existence of Pure Strategy Equilibria in Games of Incomplete Information," Econometrica, Econometric Society, vol. 69(4), pages 861-89, July.
- John G. Riley & William Samuelson, 1979.
UCLA Economics Working Papers
152, UCLA Department of Economics.
- Coppinger, Vicki M & Smith, Vernon L & Titus, Jon A, 1980. "Incentives and Behavior in English, Dutch and Sealed-Bid Auctions," Economic Inquiry, Western Economic Association International, vol. 18(1), pages 1-22, January.
- Schotter, Andrew & Weigelt, Keith & Wilson, Charles, 1990.
"A Laboratory Investigation Of Multi-Person Rationality And Presentation Effects,"
90-24, C.V. Starr Center for Applied Economics, New York University.
- Schotter Andrew & Weigelt Keith & Wilson Charles, 1994. "A Laboratory Investigation of Multiperson Rationality and Presentation Effects," Games and Economic Behavior, Elsevier, vol. 6(3), pages 445-468, May.
- Guth, Werner & Ivanova-Stenzel, Radosveta & Wolfstetter, Elmar, 2005.
"Bidding behavior in asymmetric auctions: An experimental study,"
European Economic Review,
Elsevier, vol. 49(7), pages 1891-1913, October.
- Güth, Werner & Ivanova-Stenzel, Radosveta & Wolfstetter, Elmar, 2001. "Bidding behavior in asymmetric auctions: An experimental study," SFB 373 Discussion Papers 2001,15, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
- Klemperer, Paul, 2000.
"What Really Matters in Auction Design,"
CEPR Discussion Papers
2581, C.E.P.R. Discussion Papers.
- Plum, M, 1992. "Characterization and Computation of Nash-Equilibria for Auctions with Incomplete Information," International Journal of Game Theory, Springer;Game Theory Society, vol. 20(4), pages 393-418.
- Robert Slonim & Alvin E. Roth, 1998. "Learning in High Stakes Ultimatum Games: An Experiment in the Slovak Republic," Econometrica, Econometric Society, vol. 66(3), pages 569-596, May.
- Milgrom, Paul R & Weber, Robert J, 1982.
"A Theory of Auctions and Competitive Bidding,"
Econometric Society, vol. 50(5), pages 1089-1122, September.
- Paul Klemperer, 2004.
"Introduction to Auctions: Theory and Practice
[Auctions: Theory and Practice]," Introductory Chapters, Princeton University Press.
- Pezanis-Christou, P, 1997.
"On the Impact of Low-Balling : Experimental Results in Asymmetric Auctions,"
97/05, New South Wales - School of Economics.
- Paul Pezanis-Christou, 2002. "On the impact of low-balling: Experimental results in asymmetric auctions," International Journal of Game Theory, Springer;Game Theory Society, vol. 31(1), pages 69-89.
- Elmar Wolfstetter & Michael Landsberger & Jakob Rubinstei & Shmuel Zamir, 1997. "First-Price Auctions when the Ranking of Valuations," Microeconomics 9701004, EconWPA.
- Elmar WOLFSTETTER, 1994.
"Auctions: An Introduction,"
SFB 373 Discussion Papers
1994,13, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
- Kagel, John H & Harstad, Ronald M & Levin, Dan, 1987. "Information Impact and Allocation Rules in Auctions with Affiliated Private Values: A Laboratory Study," Econometrica, Econometric Society, vol. 55(6), pages 1275-1304, November.
- Cox, James C & Smith, Vernon L & Walker, James M, 1988. "Theory and Individual Behavior of First-Price Auctions," Journal of Risk and Uncertainty, Springer, vol. 1(1), pages 61-99, March.
- Eric Maskin & John Riley, 2000. "Asymmetric Auctions," Review of Economic Studies, Oxford University Press, vol. 67(3), pages 413-438.
- 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.
- Marshall Robert C. & Meurer Michael J. & Richard Jean-Francois & Stromquist Walter, 1994. "Numerical Analysis of Asymmetric First Price Auctions," Games and Economic Behavior, Elsevier, vol. 7(2), pages 193-220, September.
- T. Randolph Beard & Richard O. Beil, 1994. "Do People Rely on the Self-Interested Maximization of Others? An Experimental Test," Management Science, INFORMS, vol. 40(2), pages 252-262, February.
When requesting a correction, please mention this item's handle: RePEc:eee:jeborg:v:69:y:2009:i:1:p:75-85. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.