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Negative Values in Vickrey Auctions

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  • Gregory M. Parkhurst
  • Jason F. Shogren
  • David L. Dickinson

Abstract

Some people assign negative values for new products sold on laboratory auction blocks (i.e., irradiated meat). We explore bidding behavior in two Vickrey auctions when people have positive‐ and negativeinduced values for the good. Aggregate bidding in the second‐price auction is precise but biased‐highest‐value positive bidders tend to overstate benefits, whereas lowest‐negative bidders understate losses. In contrast, bidding behavior in the random nth‐price auction is demand revealing irrespective of induced value, but it is imprecise. Examining on‐ and off‐margin bidding behavior, we cannot conclude that any segments of demand are significantly different than the demand revealing regression line.

Suggested Citation

  • Gregory M. Parkhurst & Jason F. Shogren & David L. Dickinson, 2004. "Negative Values in Vickrey Auctions," American Journal of Agricultural Economics, John Wiley & Sons, vol. 86(1), pages 222-235, February.
    • Handle: RePEc:wly:ajagec:v:86:y:2004:i:1:p:222-235
    DOI: 10.1111/j.1467-8276.2004.tb18468.x
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