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Signalling in auctions: Experimental evidence

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  • Bos, Olivier
  • Gomez-Martinez, Francisco
  • Onderstal, Sander
  • Truyts, Tom

Abstract

We study the relative performance of the first-price sealed-bid auction, the second-price sealed-bid auction, and the all-pay sealed-bid auction in a laboratory experiment where bidders can signal information through their bidding behaviour to an outside observer. We consider two different information settings: the auctioneer reveals either the identity of the winning bidder only, or she also reveals the bidders' payments to an outside observer. We find that the all-pay sealed-bid auction in which the bidders' payments are revealed outperforms the other mechanisms in terms of revenue, while this mechanism underperforms in terms of efficiency relative to the winner-pay auctions.

Suggested Citation

  • Bos, Olivier & Gomez-Martinez, Francisco & Onderstal, Sander & Truyts, Tom, 2021. "Signalling in auctions: Experimental evidence," ZEW Discussion Papers 21-037, ZEW - Leibniz Centre for European Economic Research.
  • Handle: RePEc:zbw:zewdip:21037
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    Cited by:

    1. Miguel A. Fonseca & Francesco Giovannoni & Miltiadis Makris, 2020. "Auctions with external incentives: experimental evidence," International Journal of Game Theory, Springer;Game Theory Society, vol. 49(4), pages 1003-1043, December.

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    More about this item

    Keywords

    Auctions; Signalling; Experiments;
    All these keywords.

    JEL classification:

    • C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
    • D44 - Microeconomics - - Market Structure, Pricing, and Design - - - Auctions
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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