IDEAS home Printed from https://ideas.repec.org/p/ncs/wpaper/021.html

Auctioning to Buyers with Correlated Values

Author

Listed:
  • Robert G. Hammond

    (Department of Economics, North Carolina State University)

Abstract

In a laboratory setting, a monopolistic auctioneer sells to buyers as the level and nature of demand changes. I ask whether sellers correctly recognize the role played by correlation among buyers' values. The prices set by subjects closely match the risk-neutral benchmark predictions when demand follows the independent-private-values framework. In contrast, subjects fail to correctly account for correlation among buyers' values once the independence assumption is dropped. I offer two new models of pricing in a correlated-values environment. The model that suggests sellers ignore correlation outperforms both the benchmark and the model that suggests sellers incorrectly account for correlation.

Suggested Citation

  • Robert G. Hammond, 2007. "Auctioning to Buyers with Correlated Values," Working Paper Series 021, North Carolina State University, Department of Economics, revised 22 Jan 2010.
    • Handle: RePEc:ncs:wpaper:021
    as

    Download full text from publisher

    File URL: ftp://ftp.ncsu.edu/pub/ncsu/economics/RePEc/pdf/Exp_Pricing_A.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ncs:wpaper:021. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Theofanis Tsoulouhas The email address of this maintainer does not seem to be valid anymore. Please ask Theofanis Tsoulouhas to update the entry or send us the correct address (email available below). General contact details of provider: https://edirc.repec.org/data/dencsus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.