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Demand Reduction in Multi†object Auctions with Resale: An Experimental Analysis

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  • Marco Pagnozzi
  • Krista J. Saral

Abstract

We analyse the effects of different resale mechanisms on bidders’ strategies in multi†object uniform†price auctions with asymmetric bidders. Our experiment consists of four treatments: one without resale and three resale treatments that vary the information available and the bargaining mechanism in the resale market. Resale markets induce demand reduction by high†value bidders and speculation by low†value bidders, thus affecting the allocation of the objects on sale. The magnitude of these effects, however, depends on the structure of the resale market. Features of the resale market that tend to increase its efficiency result in lower auction efficiency and seller's revenue.

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  • Marco Pagnozzi & Krista J. Saral, 2017. "Demand Reduction in Multi†object Auctions with Resale: An Experimental Analysis," Economic Journal, Royal Economic Society, vol. 127(607), pages 2702-2729, December.
    • Handle: RePEc:wly:econjl:v:127:y:2017:i:607:p:2702-2729
    DOI: 10.1111/ecoj.12392
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    Cited by:

    1. Pagnozzi, Marco & Saral, Krista J., 2019. "Auctions with limited liability through default or resale," Journal of Economic Behavior & Organization, Elsevier, vol. 159(C), pages 51-74.
    2. Friesen, Lana & Gangadharan, Lata & Khezr, Peyman & MacKenzie, Ian A., 2022. "Mind your Ps and Qs! Variable allowance supply in the US Regional Greenhouse Gas Initiative," Journal of Environmental Economics and Management, Elsevier, vol. 112(C).
    3. Pagnozzi, Marco & Saral, Krista J., 2019. "Efficiency in auctions with (failed) resale," Journal of Economic Behavior & Organization, Elsevier, vol. 159(C), pages 254-273.
    4. Lana Friesen & Lata Gangadharan & Peyman Khezr & Ian A. MacKenzie, 2020. "Mind your Ps and Qs! An Experiment on Variable Allowance Supply in the US Regional Greenhouse Gas Initiative," Discussion Papers Series 618, School of Economics, University of Queensland, Australia.
    5. Peyman Khezr & Anne Cumpston, 2022. "A review of multiunit auctions with homogeneous goods," Journal of Economic Surveys, Wiley Blackwell, vol. 36(4), pages 1225-1247, September.
    6. Shiying Chen & Zhenhuan Dong & Chunming Cao & Changjun Zheng, 2022. "Strategy and design of multi‐unit auction in grouped asymmetric setting," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(8), pages 3435-3453, December.
    7. Garratt, Rodney & Georganas, Sotiris, 2021. "Auctions with speculators: An experimental study," Games and Economic Behavior, Elsevier, vol. 128(C), pages 256-270.
    8. Miguel A. Fonseca & Francesco Giovannoni & Miltiadis Makris, 2020. "Auctions with external incentives: experimental evidence," International Journal of Game Theory, Springer;Game Theory Society, vol. 49(4), pages 1003-1043, December.
    9. Yiakoumi, Despina & Rouaix, Agathe & Phimister, Euan, 2022. "Evaluating capacity auction design for electricity: An experimental analysis," Energy Economics, Elsevier, vol. 115(C).

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