Valuation structure in first-price and least-revenue auctions: an experimental investigation (original) (raw)
Related papers
Impact of Valuation Ranking Information on Bidding In First-Price Auctions: A Laboratory Study
Journal of Economic Behavior & Organization, 2009
Landsberger et al. [Landsberger, M., Rubinstein, J., Wolfstetter, E., Zamir, S., 2001. First-price auctions when the ranking of valuations is common knowledge. Review of Economic Design 6, 461–480] identified optimal bidder behavior in first-price private-value auctions when the ranking of valuations is common knowledge, and they derived comparative-statics predictions regarding the auctioneer's expected revenue and the efficiency of the allocation. The experiment reported here tests the behavioral components of these comparative-statics predictions. The results support the prediction that buyers are inclined to bid more aggressively when they learn they have the low value. Contrary to the theory, buyers are inclined to bid less when they learn they have the high value. Consistent with theory, the overall proportion of efficient allocations is lower than in the first-price auction before information is revealed. But as a result of high-value bidders decreasing their bids, the expected revenue does not increase on a regular basis, contrary to the theory's predictions. Keywords: Asymmetric auctions; Laboratory experiments; Bounded rationality; Affiliation; Economics of information JEL classification codes: C92; D44; D82
Journal of behavioral and experimental economics, 2017
We conduct a laboratory experiment of second-price sealed bid auctions of a common value good with two bidders. Bidders face three different types of information: common uncertainty (unknown information), private information (known by one bidder) and public information (known by both bidders), and auctions differ on the relative importance of these three types of information. We find that subjects barely differentiate between private and public information and deviate from the theoretical predictions with respect to all three types of information. There is under-reaction to both private and public information and systematic overbidding in all auctions above and beyond the standard winner's curse. The Cursed Equilibrium and Level-k models successfully account for some features of the data but others remain largely unexplained.
Don’t Fear the Simplicity-An Experimental Analysis of Auctions
2017
5 I evaluate the performance of four static sealed-bid package auctions in an experimental 6 setting with complementarities. The valuation model comprises two items, and three bidders: 7 two ‘local’ bidders demand one item only, while the third (global) bidder only wants both. 8 The rules I compare include the Vickrey and first-price auctions, Vicrkey Nearest Rule 9 and the Reference Rule. Auction-level tests find the first-price auction revenue dominant 10 overall without losing efficiency, while the Vickrey auction performs worst; the other two 11 rules rank intermediate. Bidder-level tests of the experimental data reject the competitive 12 equilibrium bidding functions: overbidding is widespread in all four auctions, and bidders 13 are averse to submitting boundary bids. In core-selecting auctions bidders do not revert 14 to truth-telling rules of thumb. I also observe behavior consistent with collusive bidding 15 in the Vickrey auction. Contrary to theoretical predictions, the V...
Simple vs Optimal Auctions: An Experimental Investigation
2018
In single object auctions when bidders are asymmetric, the Myersonian optimal auction is di¢ cult to implement because of its complexity and possible discouragement e¤ect on the bidders. In these cases, Hartline and Roughgarden (2009) proposes a simpleauction that revenue approximates the optimal auction. This paper experimentally studies the performance of the simple auction vis-a-vis the optimal auction in terms of revenue generation. Keywords Optimal Auction, Simple Auction, Asymmetric Bidders JEL Classi cation D44, C90 O. P. Jindal Global University. Sonipat Narela Road, Near Jagdishpur Village, Sonipat, Haryana 131001. Email: shraman.banerjee14@gmail.com. yAshoka University. Plot No. 2, Rajiv Gandhi Education City, Sonipat, Haryana, 131029. Email: swagata.bhattacharjee@ashoka.edu.in zWe would like to thank Bhaskar Dutta, Yoram Halevy, Debasis Mishra, Noam Nisan, Tim Salmon, and Dale Stahl for helpful comments and feedback. This is a preliminary version. Do not cite.
Structural Inferences from First-Price Auction Experiments
SSRN Electronic Journal, 2003
We use structural methods to assess equilibrium models of bidding with data from firstprice auction experiments. We identify conditions to test the Nash equilibrium models for homogenous and for heterogeneous constant relative risk aversion when bidders' private valuations are independent and uniformly drawn. The outcomes of our study indicate that behavior may have been affected by the procedure used to conduct the experiments and that the usual Nash equilibrium model for heterogeneous constant relative risk averse bidders does not consistently explain the observed overbidding. From an empirical standpoint, our analysis shows the possible drawbacks of overlooking the homogeneity hypothesis when testing symmetric equilibrium models of bidding and it puts in perspective the sensitivity of structural inferences to the available information.