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Varying the number of bidders in the first-price sealed-bid auction: experimental evidence for the one-shot game

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  • Sascha Füllbrunn
  • Tibor Neugebauer

Abstract

The paper reports experimental data on the behavior in the first-price sealed-bid auction for a varying number of bidders when values and bids are private information. This feedback-free design is proposed for the experimental test of the one-shot game situation. We consider both within-subjects and between-subjects variations. In line with the qualitative risk neutral Nash equilibrium prediction, the data show that bids increase in the number of bidders. However, in auctions involving a small number of bidders, average bids are above, and in auctions involving a larger number of bidders, average bids are below the risk neutral equilibrium prediction. The quartile analysis reveals that bidding behavior is not constant across the full value range for a given number of bidders. On the high value quartiles, however, the average bid–value ratio is not different from the risk neutral prediction. The behavior is different when the winning bid is revealed after each repetition. Copyright Springer Science+Business Media New York 2013

Suggested Citation

  • Sascha Füllbrunn & Tibor Neugebauer, 2013. "Varying the number of bidders in the first-price sealed-bid auction: experimental evidence for the one-shot game," Theory and Decision, Springer, vol. 75(3), pages 421-447, September.
    • Handle: RePEc:kap:theord:v:75:y:2013:i:3:p:421-447
    DOI: 10.1007/s11238-013-9378-z
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    More about this item

    Keywords

    First-price sealed-bid auction; Experiment; Within-subject variation; Between-subject variation; Feedback; C92; D44;
    All these keywords.

    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions

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