IDEAS home Printed from https://ideas.repec.org/p/wzb/wzebiv/fsiv99-09.html
   My bibliography  Save this paper

A Comparison of Multiple-Unit All-Pay and Winner-Pay Auctions Under Incomplete Information

Author

Listed:
  • Yasar Barut
  • Dan Kovenock
  • Charles Noussair

Abstract

This paper examines the properties of independent-private-value all-pay and winner-pay auctions when there are multiple units sold. We study bidding behavior, efficiency and revenue in a set of nine experimental sessions, each with six bidders. All-pay auctions were played in six of the sessions, three sessions with four units and three sessions with two units auctioned. A four-unit winner-pay auction was played in three of the sessions. Our data show that the all-pay auction and the winner-pay auction are empirically revenue equivalent and yield higher revenue than the risk neutral Bayesian equilibrium. Revenue is higher in the all-pay auction when K=2 than when K=4, despite the fact that Bayesian equilibrium revenues are identical for the two cases. Our evidence also suggests that the winner-pay auction is more likely than the all-pay auction to lead to a Pareto-efficient allocation. ZUSAMMENFASSUNG - (Ein Vergleich von All-Pay- und Winner-Pay-Auktionen mehrerer Einheiten bei unvollständiger Information) In diesem Aufsatz werden die Eigenschaften von independent-private-value all-pay- und winner-pay-Auktionen untersucht, bei denen jeweils mehrere Einheiten verkauft werden. Es wird das Gebots-Verhalten, die Effizienz und der Erlös in einem Set von neun Experimenten mit je sechs Teilnehmern betrachtet. In sechs der Experimente werden all-pay-Auktionen durchgeführt, wovon in drei Durchgängen je vier Einheiten und in den anderen drei je zwei Einheiten versteigert werden. In den drei restlichen Experimenten werden winner-pay-Auktionen durchgeführt, wobei je vier Einheiten versteigert werden. Das Experiment zeigt, daß all-pay- und winner-pay-Auktionen ähnliche Erlöse erzielen, die jedoch höher sind als der im Bayesianischem Gleichgewicht mit risikoneutralen Bietern spieltheoretisch vorausgesagte Gewinn. Bei all-pay-Auktionen ist der Erlös höher, wenn K=2 als im Fall K=4, während die theoretisch berechneten Gleichgewichtserlöse in beiden Fällen identisch sind. Diese Ergebnisse legen nahe, daß winner-pay-Auktionen eher zu einer Pareto-effizienten Allokation führen als all-pay-Auktionen. Classification_JEL:

Suggested Citation

  • Yasar Barut & Dan Kovenock & Charles Noussair, 1999. "A Comparison of Multiple-Unit All-Pay and Winner-Pay Auctions Under Incomplete Information," CIG Working Papers FS IV 99-09, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
  • Handle: RePEc:wzb:wzebiv:fsiv99-09
    as

    Download full text from publisher

    File URL: http://skylla.wz-berlin.de/pdf/1999/iv99-9.pdf
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Roger B. Myerson, 1978. "Optimal Auction Design," Discussion Papers 362, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
    2. Erwin Amann & Wolfgang Leininger, 1995. "Expected revenue of all-pay and first-price sealed-bid auctions with affiliated signals," Journal of Economics, Springer, vol. 61(3), pages 273-279, October.
    3. Douglas Davis & Robert Reilly, 1998. "Do too many cooks always spoil the stew? An experimental analysis of rent-seeking and the role of a strategic buyer," Public Choice, Springer, vol. 95(1), pages 89-115, April.
    4. Potters, Jan & de Vries, Casper G. & van Winden, Frans, 1998. "An experimental examination of rational rent-seeking," European Journal of Political Economy, Elsevier, vol. 14(4), pages 783-800, November.
    5. Harris, Milton & Raviv, Artur, 1981. "Allocation Mechanisms and the Design of Auctions," Econometrica, Econometric Society, vol. 49(6), pages 1477-1499, November.
    6. Holt, Charles A, Jr & Sherman, Roger, 1982. "Waiting-Line Auctions," Journal of Political Economy, University of Chicago Press, vol. 90(2), pages 280-294, April.
    7. Glazer, Amihai & Hassin, Refael, 1988. "Optimal Contests," Economic Inquiry, Western Economic Association International, vol. 26(1), pages 133-143, January.
    8. Krishna, Vijay & Morgan, John, 1997. "An Analysis of the War of Attrition and the All-Pay Auction," Journal of Economic Theory, Elsevier, vol. 72(2), pages 343-362, February.
    Full references (including those not matched with items on IDEAS)

    More about this item

    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:wzb:wzebiv:fsiv99-09. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jennifer Rontganger). General contact details of provider: http://edirc.repec.org/data/cicwzde.html .

    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.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.