Behavior in Multi-Unit Demand Auctions: Experiments with Uniform Price and Dynamic Vickrey Auctions (original) (raw)
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International Economic Review, 2006
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Demand curve shifts in multi-unit auctions: evidence from a laboratory experiment
2005
Abstract: Basic economic theory predicts that a consumer's willingness to pay for a good is affected by the presence of complements and substitutes. In an auction setting, this theory implies that the presence of complements would increase bid prices for a good, while the presence of substitutes would decrease bid prices for a good. However, several experimental auction studies have sold complementary or substitutable products without regard for the effects these actions could have on bidding behavior. Using data from an experimental auction specifically designed to test the effect of complements and substitutes on bids, we used both unconditional tests and conditional tests where we derived demand flexibilities to analyze whether selling complementary and substitutable products has an effect on bids. Our results show that the availability of complementary and substitutable products affects bids in the expected directions. This finding has important implications for researchers who design experimental auctions.
SSRN Electronic Journal, 2015
We experimentally compare under-revelation of supply and demand across alternative variations of ascending and descending twosided price clock auctions. We find that buyers reduce demand more when the price is ascending but sellers' behavior is consistent across clock directions. As a result, the clock price rule has empirical effects on efficiency even though it is theoretically neutral.
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Auctions often involve the sale of many related goods: Treasury, spectrum and electricity auctions are examples. In multi-unit auctions, a bid for one unit may affect payments for other units won, giving rise to an incentive to shade bids differently across units. We establish that such differential bid shading results generically in ex post inefficient allocations in the uniform-price and pay-as-bid auctions. We also show that, in general, the efficiency and revenue rankings for the two formats are ambiguous. However, in settings with symmetric bidders, the pay-as-bid auction often outperforms. In particular, with diminishing marginal utility, symmetric information and linearity, it yields greater expected revenues. We explain the rankings through multi-unit effects, which have no counterparts in auctions with unit demands. We attribute the new incentives separately to multi-unit but constant marginal utility and diminishing marginal utility.
Auction Format and Auction Sequence in Multi-Item Multi-Unit Auctions -- An Experimental Study
SSRN Electronic Journal, 2000
We experimentally study the effect of auction format (sealed-bid vs. closed clock vs. open clock) and auction sequence (simultaneous vs. sequential) on bidding behaviour and auction outcomes in auctions of multiple related multi-unit items. Prominent field applications are the sale of emission permits, fishing rights, and electricity. We find that, when auctioning simultaneously, clock auctions outperform sealed-bid auctions in terms of efficiency and revenues. This advantage disappears when the items are auctioned sequentially. In addition, auctioning sequentially has positive effects on total revenues across all auction formats, resulting from fiercer competition on the item auctioned first.
2008
Abstract This paper reports results of an experimental study of uniform and discriminatory auctions of multiple objects in an environment of publicly known common values. We find that the bidding behavior in the uniform case exhibits two clear regularities: agents consistently play weakly dominated strategies by overbidding on the first unit and have moderate diffyculty coordinating on high payoff (low auction revenue) equilibria.
Vertically Differentiated Simultaneous Vickrey Auctions: Theory and Experimental Evidence
Management Science, 2010
We study settings where a number of sellers simultaneously offer vertically differentiated Vickrey auctions for imperfect substitute goods to unit-demand buyers. Vertical differentiation can arise from differences in item quality, item value certainty, seller reliability, or a combination of these factors. We characterize the form of the bidding equilibria and derive expressions for the corresponding allocative efficiency and expected seller revenue. When bidders are restricted to submit at most one bid, our theory predicts the existence of a unique Bayes-Nash equilibrium that resembles a form of probabilistic “mating-of-likes.” Allowing unit-demand bidders to place an arbitrary number of bids induces complex strategy profiles where bidders place positive bids in all available auctions. Higher bidder types tend to follow more targeted strategies, focusing their “serious” bids on fewer and, generally, higher quality auctions. The nature of the bidding equilibria introduces allocative...