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Measuring the impact of the information aggregation mechanisms: an experimental investigation

Author

Listed:
  • Moez Bennouri

    (Pôle Finance Responsable - Rouen Business School - Rouen Business School)

  • Henner Gimpel

    (KIT - Karlsruhe Institute of Technology = Karlsruher Institut für Technologie)

  • Jacques Robert

    (HEC Montréal - HEC Montréal)

Abstract

This paper measures the effectiveness of market-based and cheap-talk information aggregation. Both information aggregation mechanisms (IAMs) are frequently used prior to IPOs and sales of Treasury bonds - it is largely acknowledged that they provide agents with useful information for subsequent bidding. In a laboratory experiment, we study how information provided by IAMs interacts with private and public information and how agents integrate it in their strategic behavior in a multi-unit common-value uniform-price auction. In market-based IAMs, information gathering prevails and subsequent bidding shows that subjects acknowledge the precision of information. However, in cheap-talk IAMs, there is almost no transmitted information.

Suggested Citation

  • Moez Bennouri & Henner Gimpel & Jacques Robert, 2011. "Measuring the impact of the information aggregation mechanisms: an experimental investigation," Post-Print hal-00826235, HAL.
    • Handle: RePEc:hal:journl:hal-00826235
    DOI: 10.1016/j.jebo.2011.01.016
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    Cited by:

    1. Florian Teschner & David Rothschild & Henner Gimpel, 2017. "Manipulation in Conditional Decision Markets," Group Decision and Negotiation, Springer, vol. 26(5), pages 953-971, September.
    2. Haikady N Nagaraja & Shane Sanders, 2020. "The aggregation paradox for statistical rankings and nonparametric tests," PLOS ONE, Public Library of Science, vol. 15(3), pages 1-21, March.
    3. Alfarano, Simone & Camacho, Eva & Petrovic, Marko & Provenzano, Giulia, 2014. "The Interplay between Public and Private Information in Asset Markets: Theoretical and Experimental Approaches," FinMaP-Working Papers 9, Collaborative EU Project FinMaP - Financial Distortions and Macroeconomic Performance: Expectations, Constraints and Interaction of Agents.
    4. Florian Teschner & Henner Gimpel, 2018. "Crowd Labor Markets as Platform for Group Decision and Negotiation Research: A Comparison to Laboratory Experiments," Group Decision and Negotiation, Springer, vol. 27(2), pages 197-214, April.
    5. Goodell, John W. & McGroarty, Frank & Urquhart, Andrew, 2015. "Political uncertainty and the 2012 US presidential election: A cointegration study of prediction markets, polls and a stand-out expert," International Review of Financial Analysis, Elsevier, vol. 42(C), pages 162-171.

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