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Auctions and Leaks: A Theoretical and Experimental Investigation Auctions and Leaks: A Theoretical and Experimental Investigation

Author

Listed:
  • Sven Fischer

    (Newcastle University Business School)

  • Werner Güth

    (LUISS Rome, Frankfurt School of Finance and Management, and Max Planck Institute on Collective Goods Bonn)

  • Todd R. Kaplan

    (University of Exeter and University of Haifa)

  • Ro'i Zultan

    (Ben-Gurion University of the Negev)

Abstract

(Revised Version of JERP 2014-027) In first- and second-price private value auctions with sequential bidding, second movers may discover the first movers' bid. Equilibrium behavior in the first-price auction is mostly unaffected but there are multiple equilibria in the second- price auction. Consequently, comparative statics across price rules are equivocal. Experimentally, leaks in the first-price auction favor second movers but harm first movers and sellers, as theoretically predicted. Low to medium leak probabilities eliminate the usual revenue dominance of first-over second-price auctions. With a high leak probability, second-price auctions generate significantly more revenue.

Suggested Citation

  • Sven Fischer & Werner Güth & Todd R. Kaplan & Ro'i Zultan, 2017. "Auctions and Leaks: A Theoretical and Experimental Investigation Auctions and Leaks: A Theoretical and Experimental Investigation," Jena Economic Research Papers 2017-012, Friedrich-Schiller-University Jena.
  • Handle: RePEc:jrp:jrpwrp:2017-012
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    References listed on IDEAS

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    Cited by:

    1. Aniol Llorente-Saguer & Ro�i Zultan, 2014. "Auction Mechanisms and Bidder Collusion: Bribes, Signals and Selection," Working Papers 734, Queen Mary University of London, School of Economics and Finance.
    2. Pacharasut Sujarittanonta & Ajalavat Viriyavipart, 2021. "Deterring collusion with a reserve price: an auction experiment," Experimental Economics, Springer;Economic Science Association, vol. 24(2), pages 536-557, June.
    3. Llorente-Saguer, Aniol & Zultan, Ro’i, 2017. "Collusion and information revelation in auctions," European Economic Review, Elsevier, vol. 95(C), pages 84-102.

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    More about this item

    Keywords

    auction; espionage; collusion; laboratory experiment;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions

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