Prices as indicators of scarcity - an experimental study of a multistage auction
The price mecanism is the primary means of information transfer in decentralized economic systems. High prices indicate high demand, whereas low prices indicate low demand. Thus prices are the signals for accelerating or slowing production. However, using sequential, multi-unit auctions, we show that the price mechanism fails to be beneficial for producers in every case. As an example we discuss auctions for future access rights to a network. We use experiments to show that the incentives for free-riding inherent in auctions for future access provide inaccurate signals for investment.
|Date of creation:||Jun 2004|
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- R. Preston McAfee & Daniel Vincent, 1994.
"Sequentially Optimal Auctions,"
1104, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Tanga McDaniel & Neuhoff, K., 2002.
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0213, Faculty of Economics, University of Cambridge.
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- Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer;Economic Science Association, vol. 10(2), pages 171-178, June.
- Tibor Neugebauer & Paul Pezanis-Christou, 2003.
"Bidding at Sequential First-Price Auctions with(out) Supply Uncertainty: a Laboratory Analysis,"
24, Barcelona Graduate School of Economics.
- Tibor Neugebauer & Paul Pezanis-Christou, 2003. "Bidding at Sequential First-Price Auctions with(out) Supply Uncertainty: A Laboratory Analysis," UFAE and IAE Working Papers 558.03, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
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