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

Author

Listed:
  • Andersson, Tommy

    () (Department of Economics, Lund University)

  • Andersson, Christer

    (Department of Economics, Lund University)

  • Andersson, Ola

    () (Department of Economics, Stockholm School of Economics)

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 theoretical 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, Tommy & Andersson, Christer & Andersson, Ola, 2010. "Sealed Bid Auctions vs. Ascending Bid Auctions: An Experimental Study," Working Papers 2010:17, Lund University, Department of Economics.
    • Handle: RePEc:hhs:lunewp:2010_017
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    File URL: http://project.nek.lu.se/publications/workpap/papers/WP10_17.pdf
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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.
    4. Demange, Gabrielle & Gale, David, 1985. "The Strategy Structure of Two-sided Matching Markets," Econometrica, Econometric Society, vol. 53(4), pages 873-888, July.
    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. 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.
    7. 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.
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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.

    More about this item

    Keywords

    Auctions; Non-manipulability; Efficiency; Experiments;

    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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