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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

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  • Tibor Neugebauer

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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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    1. repec:gam:jgames:v:9:y:2018:i:1:p:15-:d:135923 is not listed on IDEAS
    2. Sascha Füllbrunn & Stefan Kreiner & Stefan Palan, 2015. "The value of a fallback option," Central European Journal of Operations Research, Springer;Slovak Society for Operations Research;Hungarian Operational Research Society;Czech Society for Operations Research;Österr. Gesellschaft für Operations Research (ÖGOR);Slovenian Society Informatika - Section for Operational Research;Croatian Operational Research Society, vol. 23(2), pages 375-388, June.

    More about this item

    Keywords

    First-price sealed-bid auction; Experiment; Within-subject variation; Between-subject variation; Feedback; C92; D44;

    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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