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Premium Auctions in the Field

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  • Sander Onderstal

    (University of Amsterdam, The Netherlands)

Abstract

In a field experiment, we study the revenue-generating properties of premium auctions. In a premium auction, the runner-up obtains a premium for driving up the price paid by the winner. Previous research, both theoretical and in the lab, has shown that the relative performance of premium auctions compared to standard auction formats is context-specific. In the experiment, we compare two types of premium auctions with the standard Vickrey auction selling high-quality, limited-edition posters in an online auction. We observe that neither premium auction raises higher revenue than the Vickrey auction. The variance of the revenue in the Amsterdam auction, one of the premium auctions, is lower than that in the Vickrey auction.

Suggested Citation

  • Sander Onderstal, 2017. "Premium Auctions in the Field," Tinbergen Institute Discussion Papers 17-024/VII, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20170024
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    Cited by:

    1. Ballesteros, Josefina F. & Schouteten, Joachim J. & Otilla, Angelyn & Ramirez, Ramona Isabel & Gellynck, Xavier & Casaul, Julieta & De Steur, Hans, 2023. "Does award and origin labeling influence consumers’ willingness-to-pay beyond sensory cues? An experimental auction on improved Philippine tablea (cocoa liquor)," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 102(C).
    2. Dejan Trifunovic, 2019. "Heuristic and Equilibrium Strategies in Premium Auctions," Proceedings of International Academic Conferences 9411761, International Institute of Social and Economic Sciences.

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    More about this item

    Keywords

    Premium auctions; field experiment;

    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions

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