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Sealed Bid Auctions vs. Ascending Bid Auctions: An Experimental Study

Author

Listed:
  • Andersson, Christer

    (Lund University)

  • Andersson, Ola

    (Research Institute of Industrial Economics (IFN))

  • Andersson, Tommy

    (Lund University)

Abstract

This paper considers the sealed bid and ascending auction, which both identifies the minimum Walrasian equilibrium prices and where truthful preference revelation constitutes an equilibrium. Even though these auction formats share many theortical properties, there are behavioral aspects that are not easily captured. To explore this issue in more detail, this paper experimentally investigates what role the design of the auction format has for its outcome. The results suggest that the sealed bid mechanism performs weakly better in all of investigated measures (consistent reporting, efficiency etc.). In addition, we find that the performance of the ascending auction is increasing over time, whereas the sealed bid auction shows no such tendency.

Suggested Citation

  • Andersson, Christer & Andersson, Ola & Andersson, Tommy, 2011. "Sealed Bid Auctions vs. Ascending Bid Auctions: An Experimental Study," Working Paper Series 882, Research Institute of Industrial Economics.
    • Handle: RePEc:hhs:iuiwop:0882
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    References listed on IDEAS

    as
    1. Tommy Andersson & Christer Andersson, 2012. "Properties of the DGS-Auction Algorithm," Computational Economics, Springer;Society for Computational Economics, vol. 39(2), pages 113-133, February.
    2. de Vries, Sven & Schummer, James & Vohra, Rakesh V., 2007. "On ascending Vickrey auctions for heterogeneous objects," Journal of Economic Theory, Elsevier, vol. 132(1), pages 95-118, January.
    3. Attiyeh, Greg & Franciosi, Robert & Isaac, R Mark, 2000. "Experiments with the Pivot Process for Providing Public Goods," Public Choice, Springer, vol. 102(1-2), pages 95-114, January.
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    5. Olson, Mark & Porter, David, 1994. "An Experimental Examination into the Design of Decentralized Methods to Solve the Assignment Problem with and without Money," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 4(1), pages 11-40, January.
    6. 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.
    7. Kagel, John H & Levin, Dan, 1993. "Independent Private Value Auctions: Bidder Behaviour in First-, Second- and Third-Price Auctions with Varying Numbers of Bidders," Economic Journal, Royal Economic Society, vol. 103(419), pages 868-879, July.
    8. Mishra, Debasis & Parkes, David C., 2007. "Ascending price Vickrey auctions for general valuations," Journal of Economic Theory, Elsevier, vol. 132(1), pages 335-366, January.
    9. Demange, Gabrielle & Gale, David & Sotomayor, Marilda, 1986. "Multi-Item Auctions," Journal of Political Economy, University of Chicago Press, vol. 94(4), pages 863-872, August.
    10. Kawagoe, Toshiji & Mori, Toru, 2001. "Can the Pivotal Mechanism Induce Truth-Telling? An Experimental Study," Public Choice, Springer, vol. 108(3-4), pages 331-354, September.
    11. Leonard, Herman B, 1983. "Elicitation of Honest Preferences for the Assignment of Individuals to Positions," Journal of Political Economy, University of Chicago Press, vol. 91(3), pages 461-479, June.
    12. 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.
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    Cited by:

    1. Anthony M. Kwasnica & Katerina Sherstyuk, 2013. "Multiunit Auctions," Journal of Economic Surveys, Wiley Blackwell, vol. 27(3), pages 461-490, July.

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    More about this item

    Keywords

    Auctions; Non-manipulability; Efficiency; Experiments;
    All these keywords.

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions

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