Efficiency in Second-Price Auctions: A New Look at Old Data
The experimental economics literature on second-price sealed-bid private value auctions has established that subjects typically bid more than their value, despite the fact that value bidding is a dominant strategy in such auctions. Moreover, the laboratory evidence shows that subjects do not learn to bid their values as they gain more experience. In the present paper, we re-examine the second-price auction data from Kagel and Levinâ€™s (1993) classic paper. We find that auction efficiency is rising over time, even though the frequency of overbidding is unchanged. We argue that the rise in efficiency is due to a decline in the variability of overbidding. This is consistent with subjects learning to bid more like each other.
|Date of creation:||09 Feb 2004|
|Contact details of provider:|| Postal: 2127 North Hall, Santa Barbara, CA 93106-9210|
Phone: (805) 893-3670
Fax: (805) 893-8830
Web page: http://www.escholarship.org/repec/ucsbecon_dwp/
More information through EDIRC
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.:
- Mitzkewitz, Michael & Nagel, Rosemarie, 1993. "Experimental Results on Ultimatum Games with Incomplete Information," International Journal of Game Theory, Springer;Game Theory Society, vol. 22(2), pages 171-198.
- Rodney Garratt & John Wooders, 2010. "Efficiency in Second-Price Auctions: A New Look at Old Data," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 37(1), pages 43-50, August.
- 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.
- Kagel, John H & Levin, Dan, 1993.
"Independent Private Value Auctions: Bidder Behaviour in First-, Second- and Third-Price Auctions with Varying Numbers of Bidders,"
Royal Economic Society, vol. 103(419), pages 868-879, July.
- Kagel, J.H. & Levin, D., 1988. "Independent Private Value Auctions: Bidder Behavior In First, Second And Third-Price Auctions With Varying Numbers Of Bidders," Papers 13, Houston - Department of Economics.
- Ronald Harstad, 2000. "Dominant Strategy Adoption and Bidders' Experience with Pricing Rules," Experimental Economics, Springer;Economic Science Association, vol. 3(3), pages 261-280, December. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:cdl:ucsbec:qt5d86p46d. 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: (Lisa Schiff)
If references are entirely missing, you can add them using this form.