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Commitment in first-price auctions

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  • Gillen, Philippe

Abstract

We study the role of commitment in a first-price auction environment. We devise a simple two-stage model in which bidders first submit an initial offer that the auctioneer can observe and then make a counteroffer. There is no commitment on the auctioneer's side to accept an offer as is or even to choose the lowest bidder. We compare this setting to a standard first-price auction both theoretically and experimentally. While theory suggests that the offers and the auctioneer's revenue should be higher in a standard first-price auction compared to the first-price auction with renegotiation, we cannot confirm these hypotheses in the experiment.

Suggested Citation

  • Gillen, Philippe, 2019. "Commitment in first-price auctions," ZEW Discussion Papers 19-062, ZEW - Leibniz Centre for European Economic Research.
    • Handle: RePEc:zbw:zewdip:19062
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    References listed on IDEAS

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    More about this item

    Keywords

    Auctions; Experiment;

    JEL classification:

    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design

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